I'm not sure how this could've happened but I believe that somehow the bearing on the countershaft is chipped and I'm guessing I need a new assembly. Almost thought it was the case at first, but from looking at pictures and the diagram n the manual I've decided it looks more like the bearing and it doesn't seem like you can buy that separate nor do I wanna disassemble the whole countershaft. Any ideas on what would cause this? I had this engine totally split so I was thinking maybe I did something wrong on assembly, but it runs, drives and shifts good. Bikes driving me insane just one thing after another

 

There is a pin that locates the outer race of the bearing and locks it into the case.
If that pin is not lined up with the hole in the case properly, when you tighten the case halves, the pin will get pushed through the bearing race and chip it.
That chip will cause enough resistance, that the bearings catch in the chip and will destroy the plastic spacer.

Unfortunately, the bike shouldn't be ridden like that.
It won't last and the output shaft isn't properly supported.
You will need to split the cases and replace the bearing.
It's a pain to do, but good news is, once you've done that, you should be good to go again.