360 magnum and 727 issues.

Was the Magnum a manual transmission engine? Removal of the pilot bearing is necessary. I would think this would create enough clearance issue it would have been obvious. I think that bearing can get pushed farther in than it should, thus creating a little more room for the convertor hub. Usually if the convertor isn't seated properly, it'll wipe out the trans pump. All things considered, Rusty's diagnosis is probably spot on.