That measurement is in inches and it is only a rough measurement with a feeler gauge. It was late and I was trying to get the rim and new tire into the car so I could take it into work and throw it on the tire machine and get the new tire mounted today before we opened.
I am going to get the assembly put back together tonight and get some hard measurements about the gap and spacer length, and decide what to do from there. I will pull up the conversion calculator and get it into mm so we aren't comparing apples to peas and go on from there.
When you pulled the rim with the original spacer installed, was it a pretty tight fit after backing off the nut and before removing anything else? Mine you could slide the rim side to side enough that it would make noise when it hit either side.
My gut feeling is that you should not have to bend the swingarm in that far to make torque. Unless somebody tells me different I am going to turn a washer down on the lathe and put it on the surface grinder and thin it out to get .003" to .006" tolerance and reassemble. After I figure out what I am dealing with I will work on the place that I bought it from and get them to give me the correct spacer if the one I have is wrong.