Lakewood Bellhousing Headaches HELP!

I have had this same thing happen with more than one Lakewood.
One I was just able to remove the starter nose insert and not use it.
Starter was no longer in a bind and it worked fine like that.
Others I have modified the starter mounting position by welding a stud in the correct
place rather than use the starter bolt. Placed it so the starter teeth engage the flywheel properly.
I didn't care for all the little bits and pieces Lakewood has in the kit. The precision of these parts just wasn't up to the task most of the time. Causing the problems like your having.
I like the Lakewood's but have never found them to be a bolt on and go type
part. Always ended up doing some welding on them for z-bar or starter issues.
I may have been a bit quick to start modifying or welding just because it seemed
easier than dealing with the small parts.