As others have observed, the rear cover or backplate has been installed incorrectly. Unbolt it and insert it with the flat that has been machined in it uppermost so that the piston clears when rotated over bottom dead cernter.
As for the starter spring, remove it and throw in the bin. You do not need it for a Merlin diesel plus it will never work as you have put it on and doubt it is an original item, probably off a different engine.
Ployd in OZ.