Don't know if you did, but I had used studs to hold the starter on, with the studs in there, it did exactly the same thing. I took the lower stud out , put a bolt in it, and used a pry bar to move the starter over as far as it would go, away from the block and tightened the bolts up. Works good now. I even sprayed a little WD 40 on the ring gear, and after a few times starting it, everything is fine.

Also, how big a wire are you using to run to the starter? Battery in the trunk?