You want the pinion resting on the third bearing so it takes the thrust loads created by the slant gears. My pinions looked the same, as did the motor shaft where you can see signs of fretting. I would replace the motor shaft and bearing also and use Loctite per above.
Rich
My pinions were 'resting' on the bearing. I used red Loctite on the 14t seen above but I guess it didn't bind the shaft to the bearing race. I used green Loctite on the latest new motor install with the new gear set. I would have replaced the shaft on the Quantum motor but they aren't available yet. So, I ordered a new motor to get back in the air. Two Hacker 530 editions are back at Aeromodel for repair, since I stripped the shaft set screws on both. I should have used heat to loosen the factory Loctite. I am going try to repair the Hacker 470KV seen in the photo myself.
This turned out to be a rather expensive 'repair/retrofit'. Three gears sets, one new motor and two in the factory shop for repair. To be fair, I have probably a total of 1500-2000 flights on my ships to date so overall, still my favorite all time heli.
Personally, I think the best fix is the new re-designed gear set. This pinion support design is not made to take much in the way of 'thrust loads'. The bearing is only going to handle radial loads. There was just too much downward pressure on the pinion with the old gears. Why else would Matt have gone to the trouble and expense of redesigning those parts, along with the nice metal motor/pinion alignment plates part number 710-101. Edit: If you are using the old gear set, try putting shims like I linked to two posts up. These might not be the best but it's a start. At the very least a thin shim or two will prolong the time it takes for the aluminum pinion to touch the bearing and begin to self destruct.