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Sure sounds like your thrust bearing is history. Is this a new build or how old is the engine? Hopefully the crank thrust service hasn't been damaged or was machined wrong.
It's not an issue and can be replaced providing the crank thrust surface is good and still within spec. I don't know if an oversize one was ever available. Also finding why it failed is important
OK, that eliminates a torque converter issue. With out tearing it down it would just be guessing but .040 isn't normal wear with that mileage. Have you contacted the engine builder yet?
Measuring the movement of crank by the main bearings in front of #4, and 8 conn rods. Could be measuring wrong but seems quite a bit of movement of crank
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