Help with 4 speed trans install

I have a 69 GTS 340 4 speed. We call it the "Bastard Child", It was purchased as a disassembled basket case. The issue is I installed the bellhousing and it fit flush on the block. I installed the transmission and it wouldn't go all the way in the bellhousing. It was out about an 1/8". The crankshaft has a new needle bearing in it. The clutch was installed and aligned. The transmission was in neutral and the tailshaft turned freely, until I tightened up the 4 bolts to pull the trans into the bellhousing. I then heard the "POP", I just cracked the aluminum bellhousing. "DAMN"! I pulled the trans out and the bellhousing off, located the crack, TIG welded it and tried to re install it. Same problem, 1/8" gap and it stops?? The tail shaft turns freely, UNTIL I tighten it again, now the shaft will not turn?? Also the bottom of the bellhousing pushes out the 1/8" that the transmission would not go in.
I assume the input shaft is hitting the end of the crankshaft?? I'm going to remove it AGAIN and cut the tailshaft down. I will measure from the inside deepest point of the crankshaft to the outside of the bellhousing. My question is, IF this is the issue, How much should I cut off? My gut feeling the 1/8" that it won't go in now plus a 1/4"?? So 3/8"??? thanks