The inner bearing does not seat, it provides no axial location.
Since you don't have a TCS, your spacer should be 2.125" long.
I'd clean up the outer journal with a bit of fine emery, then look again keeping in mind that the outermost part, just before the splines, is where the outer spacer sits.
As for the splines, since you are going to fill them up with Loctite, they probably are ok. They will only wear further if they chatter in the hub.
You are going to use the correct Loctite I hope! An earlier comment you made about removing the hub without heat doesn't suggest the correct grade was used then.