Hermi,
Try putting the spur gear on the other side like so:
http://www.alexracingusa.com/images/Floating1.JPG
http://www.alexracingusa.com/images/Input2.JPG
after I did that, I get full contact with my pinion gear. When the PAL motor mount comes, I will have to see how the alignment is. If anything, we carry long shank pinion gears.
Steve Wang