Make sure that the aluminum Jesel cover is sitting flush against the front of the block and not hitting on the oil galley plugs. I had to chamfer some of the edges on oil galley and inside the cover to get this to happen. The other thing might be that the plugs are not flush, which is holding the cover out.
If the cover is sitting flush, then is sounds like you have too many washers between the cover and the Jesel cam drive. Make sure that you have the brass washers on both sides of the Jesel cam drive. There is one that goes between it and the block and then there is one that goes between it and the cover assembly. If you already have washers on both sides, then you might need to move some from between the cam drive and the cover to between the cam drive and the front of the block.
My guess is that the cover wasn't sitting flush and you had to add a bunch of shims to get the end play down to the 0.012" and now the cam drive is too far away from the cover and is then pulling the belt drive into the cover.
Hope that this helps.
Bill Mitchell