I am a total newbie at bugs so don't take the following as gospel --
lacking the true bug experience I go with what I read and am told so am
just passing that along.

Did you see that large endplay before you stripped the flywheel off?
I stripped my engine down for the same reason very recently. Found oil
all over the clutch and my endplay could measure with a yard stick so
didn't bother fudging it with spacers
Since my main bearing seat is beat out, I need a new case.

In checking what was up with my engine, I do remember that max endplay
is 0.006 and that you should not have more than 3 spacers. Also many
mention that one should replace your gland nut to make sure it all
reseats properly.
I was tempted to use an impact wrench but was afraid to damage
something -- it should come off with a steel bar mounted to the holes
on the flywheel. I had to hang on my 5 foot cheater bar, supporting the
steel bar on a saw horse so that the engine wouldn't tip. It finally
made a gawdawful 'queeek' noise before it gave in and came loose. (256
ft/lbs my foot!)

I am sure others here can steer you in the right direction. My
babbling, if anything, keeps your message on top of the heap so many
get to read about your problem

Remco