Rebuild transmission troubles

When the converter is properly engaged into both sets of splines and the pump lugs the pads that meet up to the flexplate will be approximately 1/2" below the surface of the bellhousing. If it wasn't you didn't have both splines and the pump lugs properly aligned and most likely ruined the front pump.

Another question. You say this is the converter from the transmission that you rebuilt. Did you have it flushed out when the trans was rebuilt? If you didn't and the transmission was toasted that converter was full of crap. When you assemble it make sure you put a clean torque converter back in it.