Well I put the chain on and it hits the chainstay even with 2 washers added to the rear axle, so I raised the motor about 3/4" to get a better angle on the chainstay. This took another 2 hours and fabbing a new spacer out of the aluminum spacer thingys they give you. So the motor is raised up nicely, nice and solid mount as before and a few extra scratches added to the frame.
I hate these things. The next one I do will be a friction drive. I don't want to go fast, I just want to have fun.
Oh, forgot to mention that the chain hits the tire too, so I bought a 26x2 tire for the back. More work.
I sure am glad I didn't buy an expensive bike to put this on -