Generally they engage fully even when you pull it forward cause the notches are a little extra deep and lets the converter go back farther into the trans. than needed. That makes up for any minor machining differences between blocks, cranks, flexplates, and trans. housings. Using spacers isn't a good idea because it puts a lot more stress on the bolts. If the gears were original I bet it was just old gears that may have been cracked or their life cycle was just used up.