You are correct, the motor should sit squarely in the mount. The bind is probably that you have misplaced a spacer washer that fits the prop shaft. You will know the motor is mounted correctly when the spinner backplate is an even distance between the front cheeks. Here is a link to the manual for the engine, you can use it to find the spacer and the 2 blade prop driver that you would need to use for a standard 2 blade prop. It won't work correctly without using this in place of the flywheel.
http://www.horizonhobby.com/Shop/ByC...ProdID=EVOE100