Yo Wrench

[Ketchup]

Coulda text ya, but info for the masses. 
 

how much rubbing on the gearcase is to much from a bad spacer/thrust washer, and a person should consider a new housing? 
 

Prop dug in about 1/8”. 

[fishinwrench]

From a performance standpoint any loss of material there is bad news, because it increases prop venting after the correct thrust washer is installed. 

Depending on the design of the gearcase it may just be damage to the bearing carrier and not the actual gear housing itself.   Some bearing carriers are held in place by a "spanner nut", and others are held in place by external bolts.  If it is the spanner nut design then damage there can prevent reassembly of the gearcase, should it ever need to be disassembled for repair or resealing. 

Whoever installed the prop, and then didn't check it for clearance.....needs to be kicked in the nuts !   🙄