First, how far in should the torque converter sit inside the transmission housing? Should it be almost flush with the housing or sit in 1/8 inch or so?
Second, what should the gap be between the torque converter and flex plate before they get bolted together? Should they be just far enough apart for each to spin independently by hand?

 

you need to spin the torque converter until it clicks either twice or three times as it sets

you need to research to find it for the vehicle, normally it's 2 times but it could be 3

if you just sit it up there it's going to get damaged it needs to be properly seated by clicking

you can pick up a shop manual

https://www.rockauto.com/en/catalog/...r+manual,10335