Success at last!!! New starter, seals, and gaskets and runs great with no leaks. Ran on muffs for about 20 minutes and not a drop of coolant or oil (oil pan gasket).
I found what caused the impeller to grind on the cover -- years ago the PO replaced the seals because of a groove under the front seal. Instead of using speedi-sleeves, he used 2 timing cover gaskets to get the seals to ride on different places on the cam shaft (away from the groove). With 2 gaskets, PO had to use a washer under the impeller (between impeller and cam shaft) to get the impeller to clear the timing cover. When I installed the sleeves and replaced the seals, I used a single timing cover gasket, but reinstalled the PO's washer under the impeller (thinking it was factory). With only one gasket, the washer caused the impeller to ride too high and grind on the cover.
I got lucky finding this problem. I was actually going to reinstall the washer under the impeller again but as luck would have it, I could not find it. When I called the shop to see if they had the washer, they told me there was not supposed to be one under the impeller.
Thanks to everyone who helped me with this. Yet another project that a not very mechanically inclined accountant was able to pull off with all your help!!
