my friend is replacing his 727 to a 904 transmission and the starter hits the block, anyone else have this problem.
its the 450hp crate motor. I did some grinding on the block and its better but, when just cranking it over with no spark plugs, the starter gear hangs up on the ring gear.

Is it the same starter that was on the 727? There have been some mini-starters that I had some clearance issues with, but that was years ago. I never got the part #'s or figured out a reason for not fitting.

If everything has been clearanced, the starter gear hanging on the ring gear shouldn't be related, unless the starter is actually crooked because of the interference somewhere.
The relationship of the starter to the ring gear doesn't change between small block 727s and 904s.

I had interference once with an MP mini starter and my former 360. I had to remove the plastic "guard" that goes around the battery lug on the starter. Even then I had to grind a little on the block in this area, to keep the cable end a safe distance from the block.

Can it be shimmed to make sure the starter is square to the ring gear? Starter ever been dropped?

codfish

The 904/A500 wasn't used behind the 360 Magnum engines (that I'm aware of) and they mount the starter a little closer to the block than a 727/A518. I had to trim the block slightly in a couple areas, mostly by the pan rail at the rear to get a factory mini starter to fit. Also, some of the Mopar mini's will hit the B&M 360/904 flexplate; I had to trim the starter nose by the drive gear.

I always ran 340s with a 904 when I went to a 360 crate short block/ 904 I had to grind a little also to get the mini starter to fit. I think the starters vary a little is size also, I recently switched starters and the one I installed fits even tighter.