Thanks Tbone. I had another buddy check last night and he has this amount of free movement on the Counter Shaft as well.
I have questions about the transmission too (this is my first time opening the case). If you have some advice for me regarding the tranny then I sure would appreciate it. I have the case split now, but I haven't pulled any gears out because I don't know what to look for. While riding, my shifter was getting stuck just before engaging the next gear. It would go into gear, but I had to put way too much upward force to do it. Same with all of the other gears, but it seemed to get a bit easier with each gear progression.