I had this issue, I installed the top bearing block upside down so the lip to retain the bearing was on top instead of being underneath.. The gears still turned but it was very tight, it went together fine like this but once I snugged up all the screws for case it did not spin freely. You may want to double check this. Page 4 of the E6/7 TT Conversion Kit - Online Manual shows this a bit better perhaps.
The photo of the assembled helicopter is an E5, but the case that has no gears is from my E7, currently in a dumb thumb state