questions setting up my 742 (again)

What size shim do you have between the pinion and the large bearing? I start with .020 and then install the pinion in the case with no preset shims until it is snug. then check your pattern. From there make large adjustments, like .005 adding and taking away until you get a good mesh pattern. Once that is done then add your new bearing on the pinion ad set the pinion preload with the small shims behind the smaller bearing. Sounds like to me that you don't have shims behind the larger bearing?