I had to put a new wet clutch housing in my wheeler because I stripped the threads on the primary clutch spline..
my question is does the housing have to sit down flush with the case? If so im having a time getting it in any further!
any help would be very appreciated!

 

Not quite sure what your problem is. The clutch drum will have to be pulled up against the bearing, so the spacer collar you picture separately, has to be slightly longer than the boss it fits on. So that when the bolt you stripped is tight, everything on that splined shaft is locked solid together, except the outer sheave (moveable drive face) which floats on the longer spacer.