A little history - my 2005 CRD (110,000 miles) was leaking coolant into the #2 cylinder. I removed the head and had it checked for cracks at a local machine shop. He did not find any cracks but said that it was warped about 2.5 thousandths. (that seems minimal but I wasn't going to reinstall it). I read in the FSM that these heads could not be resurfaced so I started searching for a new head. No luck, I was told that there are none in the US and no idea of when they would be available. So, after some more research and thought and money...I decided to get a remanufactured engine (new cylinder head and all). While I had the engine out I decided to go ahead and replace the torque converter and front transmission seal. I purchased a Euro TC part # RL037142AA. Here is where I'm running into a problem.

As I'm installing the new engine and TC everything is going smooth (as least as smooth as possible) but as I'm tightening the engine to transmission bolts and pulling them together....I'm rotating the engine to make sure everything is going together properly...I get the engine about 1/2" from the transmission it appears that everything locks up. I backed off the bolts and the engine rotates fine. I suspect that the TC is hitting the transmission housing.

Does anyone have any ideas?

Most likely need to fully seat the TC in the trans pump.Need to spin the TC while applying some pressure until you hear a "Thunk" and the TC will push another 1/2" into the trans pump.