It is supposed to be 1mm gap there, if no gap you have no synchro action at all.
There are other things cause crunching- worn synchro outer sleeve, or soft springs in the hub (my bet).
If these springs are too weak, there is insufficent rotation torque transmitted to the baulk ring during initial engagement to allow it to be blocked by the outer sleeve. So, it crunches...
When I build boxes now I use new springs, or hand selected s/h ones.
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DrMini- 1970 wasaMatic 1360, Mk1S crank, 86.6HP (ATW) =~125 @ crank, 45 Dellorto (38 chokes), RE282 sprint cam, 1.5 rockers, 11.0:1 C/R.
