Starter confusion

[csb#356]

I am in the process of replacing my flywheel because my old starter ate through the teeth. So right now I have just the flywheel and the starter on with the solenoid taken off and the pinion gear on the starter can't come out far enough to engage the full width of the flywheel. there is a bushing that is stopping it from going any further. Is this how this is supposed to be? Also on my old flywheel only about 3/4 of the width of the teeth are gone so my old starter must have been the same way. Can anyone shed some light on this situation, I have to have this back together by monday.