I bought a Zenoah G-38 at a flea market for less than half price. The engine was never run. I am thinking of putting it in a plane and found that there is a shaft coming out of the rear of the engine. What is the purpose? Is this an aircraft engine? Is there a way to remove the shaft?

Some people you that shat to attach a spring starter or even an electic onboard starter. some will even have the shaft cut off and rebalance the crank

That shaft coming out of the back is commonly used with a spring recoil starter such as B&B Specialties sells. It is part of the crankshaft and not removable. If you just don't like the looks of it you can cut it off with a Dremel tool. G-38s start very easy by hand so you really don't need a recoil starter. If you cut the shaft off, re-balancing is not necessary because the shaft plays no part in the balance of the crankshaft.

It's an airplane engine if it has a prop hub on the front. If not, you can order a prop hub from Ralph at RC Ignition or Horizon Hobbies.