Originally Posted by stdyhand

I could be wrong but I thought there was a spacer between the bellhousing and the engine and without it the starter would not line up properly and thus could cause the starter to grind.

Other than that, assuming the starter is mounted correctly and is kicking out properly I'd have to wonder if the engine was somehow screwed up internally and wasn't turning over so easily and was causing the starter to chip teeth off the flywheel. It probably isn't the case but I'd have to wonder if everything else was being done properly. Just for S&G I'd put a socket on the crank bolt and rotate it a full turn just to see if it hangs up anywhere. Again its not likely but if you tried turning over an engine that was siezed up your likely to chip teeth on the flywheel.