If you look, the wear on the cover, it's from the drive gear and not the driven gear. looks like there was downward pressure on the gear. I would look real close at the intermediate shaft and the shaft bushing. also take a look at how much clearance you have between the distributor and the intermediate shaft (will need to look with intake off).
If you know someone with a mill, that's a easy fix.

Joe
PS if your not going to fix it, PM i will buy it from you.

PPS I just seen you found the issue.