When setting up endplay with a dial indicator, I am observing the needle jump back and forth a bit when hitting the flywheel (keeping towards the center). About 4 thousands. The needle will go to max forward travel, then another whack will cause it to jump back the aforementioned 4 thou. Almost like everything is bouncing. Should I just go with the forward most reading?

Are you hitting it with a hammer?
You shouldn't have to hit the flywheel. You can pull on it by hand to make it move. At most you two screw drivers behind the flywheel to pull it out.

If possible, pull and push on the pulley end of the crankshaft.

The Cap'n

Hitting is also not good for your dial indicator.

Driving it forward with a dead blow (plastic covered) mallet. Pulling it back with big screwdrivers. I am thinking what is happening is that the rods/pistons are causing the spring back from the front. Also thinking I should go with the highest measurement (furthest travel forward) even though it bounces back from that.

If you do that, you're recording flex in the flywheel. As I said before, push and pull from the other end if at all possible.

The Cap'n

Kinda hard with the fan and housing on. I can push, but not pull easily. When banging on the flywheel, I am trying to stay on the center, actually hitting the bolts with the soft mallet.

If you mind the fins, you can easily pry the crank back through the timing hole.

The Cap'n

Engine is out, with all the tin.

I am seeing the assembly move forward according to the dial indicator, kinda stop, then with another taps with a hammer, move forward. From this position to the position i get when I either tap the fan back with a hammer handle, or via the pry with two screw drivers on the flywheel, i am getting 6 thousandths. Repeatedly. I think I am gonna go with this shim set.

if the engine is out, just put your hand in the middle of the Fan and shove hard.
thats one side, push the flywheel in and there you are.

With just pushing the flywheel in, it stops at one point, then a few gentle taps with the mallet move it another 3-4 thou. I think i need to go with the mallet driven position, as a running engine will put more force on it than my pushing by hand.

Ok, Have it your way burger king.