Nuovo Falcone gearbox and rear wheel issues

I have bought the nuovo out of its winter’s rest to sort out problems that became apparent after a shake down last year following a rebuild.
The third gear was kind of miss. I can select it when the bike is stationary, but as soon as any attempt to use it to drive the rear wheel I get horrible clicking noises coming from the gearbox and there is no drive. When on the move if I manage to select it there is no driving force but there is some engine braking. I suspect there is a major problem with the gear cog or the shaft and am looking to be an engine out and full engine rebuild job.
The rear wheel problem is to do with the chain adjusters which was bought new. Problem was to do with the spacer on the left hand side, which protrude through the swing arm and the chain adjuster has a recess which accommodate the portion of the space that protrude to the outside of the swing arm. This recess was insufficiently deep resulting in the left side of the axle not gripping the left side of the swing arm. So when the bike is pulling, the left side of the axle is pulled forward. I am machining a deeper recess in the chain adjuster on that side.
Just wonder if anyone else has had similar experience.