crxb16er,
Wow, I've never seen anything like this before. I wonder if you can supply 12v to the starter to see how the gear engages and retracts. My first thought is that there is a measurement wrong somewhere, ie the flywheel is too far out from the engine, or the starter gear isn't retracting enough. How about this...I have to assume there is a bit of wear on the flywheel and the starter gear from this problem...is is just on the tranny side of the teeth of the ring gear? or does it cover the whole tooth...you'll likely have to rotate the flywheel to see this...
Bogatyr