I replaced my 65 292 water pump with a 78 292 water pump and the pulley sat about 5/8" further back. It was like 25 bucks. That might help.
I'm not sure if this makes sense or not, but I tried a later 292 pump. The propeller was contacting with something inside the engine when I turned it (maybe the wall of cylinder #1). I returned the pump to rock auto for an earlier one and this didn't happen anymore. I suppose it could have been a faulty pump.
