I bolted up a new Hitachi style mini started to my 350 engine (out of car) to check for alignment and gear mesh. It lines up very well without shims but the starter gear does not retract after I manually pull it out with a screw driver. If I manually turn the engine over slightly, it quickly retracts so just wanted to get feedback if this is normal.

 

You need room for heat expansion. My FSM says .020" pinion to flywheel clearance.