I would agree with Aaron at this point, put some miles on it before you give up. It really does sound to me like the clutch fingers scraping on the throw out bearing face. The throw out might be new and tight with fresh grease packed in it, and just needs to be used a few times to loosen up. There's not much it could hurt, considering you are contemplating a new one anyway.
As far as endplay on the crankshaft being excessive and allowing the flywheel to contact the starter gear, you should be able to see evidence of that in the form of a continuous shiny scrape around the ring gear on the starter side. I once did a clutch on a Toyota pickup and we couldn't get it to work consistently, then after much trying this and that we found you could grab the flywheel and push it front to rear about a half an inch. The engine was then toast.
I would be happy to come by, but can't make it till Wednesday afternoon.
You were 100% correct on the end play. However, I do not believe my engine is bad. I also do not have 1/2" of play.
The new flywheel looks like it is cast different
(fatter) than the old one where it bolts to the crank. AND I have a fair
amount of play in the crank (172K miles). So when I was pushing in the
clutch, it was pushing the new flywheel forward to where it was just
scraping the block some. I cleaned up the old flywheel, put it on and
pushed in as hard as I could while turning it and it does not "seem" to
be hitting. Will know tomorrow when I bolt the trans back up and try it
out. Hopefully 3rd times a charm.