car: 96 integra LS
problem: there is a gap (about 2 mm) between the axle and intermediate shaft. am I suppose to bang it all the way in? seems like there is a metal thing blocking it inside, or is that the axle ring.

 

youve got to find out how they mate by rotating and pushing in at the same time until it slides in, youll know when youve found the spot. At least thats how i remember it when we did the transmission

 

it is mated together..i installed it like this yesterday and test drove it and now it makes a clunking noise from 1st gear, reverse, etc..

 

You are using the correct axle right?
PM me in a few hours and I'll tell you what axle seal you will need to cover that up as I had the same issue and I have it written at home

 

yes its the correct axle..
so that part just needs to be covered?

 

It looks fine, what Intermediate shaft is that and what axle is that? are they both from the same car? if yes then you might just need to push it in harder, so far everything looks fine.