Phily,
That is a strange one for sure.
What does the crankshaft gear, the small one in front, look like? Does it show any signs of abnormal wear? Were the gears ever lubricated? It doesn't require much, just a dab so you don't get grease in the clutch. Unless the engine block halves are loose and coming apart there is really no way for those gears to be misaligned or too far apart unles there is a problem with the engine casting or something is cracked and allowing separation. This is the first time I've seen this problem but hopefully someone with years of China gal experience will have an answer.
Tom