You should be able to just flip it over and make sure the shoes are oriented so the shoes are leading. It shouldn’t have that much overhang unless there are spacers already there. Is it the correct chamfer washer? The beveled side goes towards the engine. Make sure it is on the right way. I have 3 206 engines with this clutch and had to use the spacers to get clutch the proper amount off the crank. Also check to make sure the keyway isn’t blurred up so the clutch isn’t sliding on all the way. Yes, it is best to run the gear inboard so you can move the engine further in. Hope this helps. Those shoes are pretty tough, but if the grove is almost gone, might be worth replacing.