I've had the engine out of the car to fix some oil leaks and upon removing the flywheel, there was only two shims, and one of them was just about destroyed. Does anyone see anything wrong with this pic? (besides the oil everywhere!)

47 views and no comments? You guys are slipping.

I don't know... Maybe only two shims! I can't really tell anything from the picture, but I would definitely be checking endplay at this point and subtracting the two shims to see where you're at. However, you should always have three, so you should take your measurements and order those now. My guess is your endplay is excessive right now due to the lacking shim and that's why the one is 'almost destroyed'. I don't really know what your question is. You seem to know already that this is wrong.
Mark D.

Hard to tell from the picture but it looks like a smaller dia shim is stuck in there. It is no longer round.

I did check end play with no shims. it measured 2.3 mm. .38mm is the biggest they make. With three .38mm shims, I still have a full mm left..

That smaller diameter shim is actually the end of the main bearing.

Your trust is fuched, tear down time.
If you can't get it to spec with 3 shims you're done, 4 shims and the crank throw will hit a main bearing web.
If you're lucky it's just the bearing, if not it's a line bore and bearings with an OS thrust.

Good eye Mark! The end of the thrust that lips over the case is completely ground off by the flywheel. I took my fresh case for my 2056 build off the engine stand to fix the leaks in this engine. I figured I could reseal, and reinstall this engine, so I could drive the car till the 2056 is finished. WRONG!!!!!! Looks like this one goes in the pile and the new one is hot on the front burner. I don't like my car to be down. Not even for a week.