[blykins]

Well, a couple of things....

1. Make sure every bolt that's used to bolt the bellhousing to the block is in and tight.

2. Make sure there are no burrs, paint, powdercoat, etc., in the rim where the dial indicator rides.

3. You don't have to move as much as you think. If you're at 3:00 and zeroed, if you move the bellhousing .025" to the right to make the 9:00 measurement go away, then your your 3:00 measurement would essentially be -.025" and your 9:00 measurement would then be 0. You need to split the difference.