Guess what ya'll.... I am having the same exact problem with a 500hp 406 I just built. I bought a powermaster gear reduction starter and I still have a nasty grinding noise. Upon further inspection, i found that without any shims, the starter gear is too far away. I must have the wrong flywheel. The engine is internally balanced as opposed to the stock configuration-external. The mounting bolts are staggered. 1977 509 block. I am going to a different flywheel.