ORIGINAL: SeamusG
I'm wondering if the prop "drive flange and tapered collet" installation might have caused the bearing to fail. When installing the prop the first time after reassembly the prop nut applies pressure to the prop which in turn applies pressure on the drive flange. The drive flange puts pressure on the tapered collet causing it to bite into the crank. (what stops the collet from being forced against the front bearing?) While the prop nut is being tightened it seems to me that it is also pulling the crank forward against the back side of the main bearing. The tighter the prop the more pressure being applied to the back side of the bearing.
This system of retaining the front bearing is properly designed. If it was not assembled correctly or manufacturing tolerances are not within spec there may be a large preload on the bearings. That preload would be very noticeable as a tight engine. The step on the shaft where the inner race of the front bearing seats is what prevents the collet (or in keyed engines like OS, the drive washer) from binding up the bearings as the prop is tightened.
It sounds like you had a damaged or defective bearing.