Found another problem, but cured now!!!

So spacer machined, engine back in, clutch bled, still didn't work...

Took it all back out and with some advice from members of Locostbuilders, added a couple of washers behind the spacer to end up with a clearance between clutch fingers and thrust bearing (when fully pushed back against its spring) of about 1.2 - 2mm.

Back together, still no luck. Then read up after an extensive amount of internet searching about the gearbox input shaft possibly to tight into the spigot bearing in the crankshaft. When in 4th the clutch would slip a bit when pedal fully depressed, and in 5th moved easier, but still locked in 1-3. Suggested that something was locking eng and box together but could be overcome with enough effort. Quick and easy way to check, undo the engine to box bolts a bit, pull the two apart and stick a couple washers between each bolt hole. Back together and....

IT WORKED! Clutch depressed and all ok, biting point seemed fine. Lots of money spent replacing cylinders, fluid lines, 3 bottles of fluid and a new slave cylinder unecessarily, oh well at least we're back on track. Few hours later and hoses pipes and wires all back together. Next step - starting the engine again!