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Bearing does look further inside there... Could just be the angle.
But I can see what looks like a circlip that's not in place properly 🧐
Can you move the bearing at all?
Not sure how it didn't make the grinding noise from the start 🤔
If it's contacting now but wasn't when fitted then it can only be that the bearing has moved or failed inside surely?
Get a nut welded on it.
The threads on them are exposed underneath the car and will be rusted up.
The heat from welding will help too.
Will just need to stick a fire blanket over the seats to protect them.
As Brigsy said, turn by the crank.
When you say 12 o'clock position, there's no 'fixed' position it should end up. However they mostly tend to sit around the 2 o'clock position.
You want to go off the marks on the tensioner, don't get fixated on where the tab ends up.
New mid torque would do it, could buy body only and then get a charger and a 5ah battery separately total of £265.
https://www.powertoolmate.co.uk/kit-builder/milwaukee-18v/milwaukee-18v-impact-wrenches/milwaukee-m18fmtiw2f12-0-18v-fuel-gen2-mid-torque-1-2-impact-wrench-with-frictio.htm...