cub149: I've been reading your M18 posts with interest, as I have an M18 in a 782. Looking at the picture of the starter and the clever shroud mod you made, it appears to me that the magnet which fires the magneto has slipped a little. I know it is bolted onto the flywheel, and I'm wondering if one of the bolts backed out a bit. A slight movement of the magnet might account for the scuff marks on the magnet itself, and may be contributing to the issues with the starter.
Oops, I notice that it's been over a year since you posted on this topic, I can only hope that there wasn't an issue, or that you resolved it successfully.