Success!! We put everything together and it all check out fine with measurements and spinning by hand, so we stuck it in, bolted it up and it runs! Did the break in procedure and retorqued the head. Seems to be running great.
We're still not sure where things went wrong the first time. We had it spinning by hand at least until we got the pistons in and probably after the head to adjust the rocker arms, but we don't remember if we gapped the rocker arms before or after we got it in the machine.
The most likely case is either when putting it in it bumped up against the spline shaft and pushed the crank forward (which we don't recall it doing anything that hard), or the spline shaft wasn't completely lined up when we bolted it in, binding somewhere and when the bolts drew it in, it pressed against the crank.
In hindsight we never knew how easily or hard the engine should turn over with new parts in it. Had we known that, that it should have turned easier than it was, we could have saved a lot of time checking everything else out. Apparently there was enough binding and friction that it would smoke and almost start, but too much force working against it to kick over and run. It's also a good thing it didn't run. It probably would have start tearing up other parts that are more expensive than a bearing.
Happy ending so far!
Thanks everyone for your help. It's a good place to go when you start to bang your head on the wall trying to figure out what's wrong.