Are there any shims behind the tapered collet? (in between the collet and the front bearing ) If so, remove it/them and try it again. It sounds like the flywheel is a little too far out on the shaft.

What manuf. flywheel / collet are you using and which vehicle is the engine going into? There are a couple (at least ) different angles to the collets, and the taper to the bore of the flywheel must match, or you'll have alignment and or binding issues.