At this point I think I would put the gear on without the shim, put the pulley and slinger on without the cover and tighten the front bolt. Then check to see how things line up and much end play you have.
I suspect there is a problem with the thrust bearing surface on the crank, as in it's worn beyond limits. Most likely it has gotten worse since the homemade shim was installed. If it had a fiber washer, it may be completely gone. But, if they were trying to tighten the end play, that shim would have had no effect, way I see it.??
To reduce the end play you add shims behind #2. That will work if it's somewhere near tolerance, not if it's 1/8 inch or so.
Still, I would try and see, it could be OK...