ok... See if I have this right....
The boat is a 1985. Which, if the engine is the same year, would make it an MR, but you have an MC1 drive...
The upper gears in your MC1 drive chewed out. You purchased an MR upper housing to replace the MC1 upper. As you pulled the MC1 drive off, it pulled out the gimbal bearing, which you 'put back in' with a piece of 2x4... You swapped the shorter yoke from the 'broken' MC1 to the 'new' MR upper... Now it will not fit back in...
If I have this right, then there are a few issues you should consider....
1. The chewed up gears will have dropped metal shards in the oil, and the oil in the upper is connected to the oil in the lower, via that little passage with the quad seal between the housings. Any metal in the upper will make its way down into the lower fairly quickly... That lower housing is on the short list... It will fail, due to metal fragments fro the upper, fairly quickly...
2. The gimbal bearing being replaced with the '2x4' has damaged it. In driving it back in you loaded the inner race, and that will have put micro-cracks in the balls and race surfaces. It too will fail fairly quickly now... When you drive those bearings in, you need to use either the special tool, which is machined to drive only on the carrier, or very carefully use a THIN rod to drive evenly and gently on the bearing carrier.
3. When you put a new bearing in (and a bearing pulled out should NEVER be put back in), you should also align it to the coupler, or the drive will be difficult to put on... At the same time, you should check, and adjust if necessary, the actual engine alignment...
4. If the engine and transom assy ARE 'MR', then the drive should be using the longer (MR) yoke, not the shorter yoke...(see below)
Last thing. Let's confirm what TRANSOM ASSY you have (we care little about the boat itself. That could be the ark as far as we're concerned). Could you please measure the rear engine mount spacing. If it's 10" (roughly) you have an 1983+ ('R', 'MR', 'Alpha One'), if it's 14" (roughly), then it's '82 or earlier (MC1)... If you could include a photo of the bell housing, that would also help (where the drive bolts on)...
Could you also measure the yoke...
Chris..........