Yep,you dont want the converter shimmed tight to the flexplate.Once the trans is bolted to the engine flush,then the converter needs to be scooted forward into the back of the crank and made flush to the converter.that scooting forward amount should be around 1/4" or 3/16 like you said.

 

sometimes build heights are off


stock


PI

 

exactly

a couple of more things I found out
was to sand the paint off the pilot
and also check to make sure youre in the 3rd click
like shown above or youll be dropping it back down

 

3rd click is not a good way to gauge it,the best way is like what you have done,lay a straight edge across the front of the bellhousing and measure the distance into the converter mounting pad.YOU MEASURE THE OLD CONVERTER FIRST,before you remove it.then you will know how far the new converter should sit in.
The converter manufactures must want the novice's to ruin there new converters and pumps,they like getting there converters back to repair them.If this wasnt true they could easily ship with the converter a cardboard gauge to ensure the customer fully installed there new converter.

cleaning the pilot paint off is a good idea too.Lube the hub also

 

Pretty much what I did right there. Miced and used different thickness shims to take up my space. But I spun and spund and spun on the verter till I knew dam sure it was engaged.

 

I did the three click thing to and made sure it was recessed into the bellhousing and not fluch. If it is flush then it is only on the second click and ahsnt engaged the pump dogs yet not to mention it wont go in.