A couple mechanical issues that are stumping me

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When you removed the front reflector bracket from the headset,did you add another washer to the stack on the steer tube to make up the difference? The derailleur does not look right horizontal. Normal more like pointing at 5 or 6 o'clock. Might be too much chain wrap around? Is there a 3rd adjusting screw that will rotate the position of it ?
 
When you removed the front reflector bracket from the headset,did you add another washer to the stack on the steer tube to make up the difference? The derailleur does not look right horizontal. Normal more like pointing at 5 or 6 o'clock. Might be too much chain wrap around? Is there a 3rd adjusting screw that will rotate the position of it ?
There was a stem shifter in the stack as well. No, I didn't add washers to account for that hieght, but the lock nut isn't bottoming on the top of the fork, and tightening fully, so I don't understand what adding washers would prevent other than just making the stack higher?

I'm not sure what you mean by "too much chain wrapped around"? I haven't noticed a 3rd screw, but I'll look more closely for one. This is my first old Schwinn derailleur, so there could be something goofy.

Sorry, I haven't had time to fiddle with the bike since I've asked this question. I'm hoping I can tonight.
 
I've made some progress.

#1 = wrong bearing set. Apparently in my haste to build I grabbed the wrong set for the lower (Like Wildcat said, they are two different sizes. Who knew!!) race.

#2 = As I was troubleshooting #3, I played with the freewheel to look at #2 and realized there was more movement in the freewheel than I think was healthy for it. It's a Falcon freewheel, so probably not the best quality. I couldn't tighten the play out of it, so I'm going to replace it.

*** Does anyone know if a Schwinn Freewheel (There is a guy selling some) takes a special tool? I have shimano freewheel tools.

#3 = I took off the derailleur and went through it ensuring everything was snug. I couldn't find any adjustment for the pullback spring. The movement through the full swing of the arm feels smooth. So, I added 3 links to the chain to see what that does, but I'll be on hold while I wait for the freewheel.
 
get the bike stood up straight. go behind it....a few feet back. look at the derailleur. Is it hanging straight down? It could have got knocked and bent slightly. If so you could tighten up an adjustable wrench onto the derailleur claw part, just blow the wheel axle. then use that to straighten it. derailleur can be bent in 2 planes. the horizontal and the vertical. Horizontal straightening is easier to do.
 
On my initial build I had to straighten the cage to get it in-line with the chain. It was bent vertically and laterally. I thought I looked at the derailleur body, but now I'm wondering. When I get it all put back together I'll look again.
 
Got the new freewheel in today, and that took care of the "thunk" problem. Put everything back together, and the derailleur was working fine. I had lubed the heck out of it, released the set screws, and worked it through it's full motion a number of times, so maybe that's what it needed. I did add 2 links of chain, but the chain was too slack after that and I took them back out.
Rode it up and down the street a few times and mostly everything feels really good. The front tire... the original from '71... feels pretty stiff. So I've got a new one coming since it's a rider. And the brake lever grips came loose, so I've got to figure a way, other than hair spray, to get them to stick.

Thanks for all the helpful ideas, they really helped me get to the solutions!
 
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