Dana 18 output shaft not seating in front bearing cap?

Round two of reassembly of my transfer case, this time without that damn interlock pin.
The output shaft doesn't seem to go far enough into the front bearing cap to seat the bearing.
Only thing I can think of is that the pilot bushing is holding me up.
When I replaced it I pressed it in flush with the end of the shaft and hand reamed it to .626 dia. Should I have pressed it further into the shaft?
Also part of my rebuild was switching over to one of Herms twin stick conversions. Could the issue be with the front bearing cap itself being shorter or something like that?
Haven't even gotten to the point of installing and shimming the rear cap.

 

Here's what I'm looking at.
Looks wrong to me. Shifts fine at this point.

 

I've rebuilt many D18's. never seen anything quite like that. What happens when you put the rest of it together?

 

I'm guessing it's going to bind up unless I throw a 1/4" or more worth of shims on it.
Tried tapping it in with a brass hammer and that's as far as it goes without really hammering on it which I'm pretty sure I shouldn't have to or want to do.

 

Going to try marking up the end of the shaft with a sharpie and see just how much engagement I'm getting into the pilot bushing.

 

The front shaft is going fully into the main shaft. It can't go any further. Only remedy I can see is to press the pilot bushing further in. But is that right?
It's like the bearing cap itself is to short??

 

Have gone through the factory service manual, the Novak instructions and a few online guides. I can't see that I'm doung anything wrong.

 

Well, I never had to put that many shims in. the bearing doesn't look like it's at near to it's correct place, You say it shifts OK. Are the shift forks installed right?

 

Forks are identical to how I remember taking them apart and match up with every picture I've found.
But I'll check it again... has to be a dumb *** mistake on my part somewhere

 

Front fork... this is correct, yes?
Pardon the crud looking stuff. I was smearing everything with Vaseline as I assembled it. Now it's become a curse.

 

Look down inside the bushing and make sure the tab where these things are made isn't sticking out and causing the shaft not to seat. If i remember correctly some of these bushing are roll formed from sheet material. Also make sure your front output is all the way forward.

 

Here's the front output shaft

The original bushing was loose and I just plucked it out with my finger. So I don't know how far it was actually in.

 

Thanks Glenn.
I'll press it in further and go from there.