If you had a later HZ/VB onwards long nose waterpump and that pulley I think the problem would be arse about. It does look to me that the harmonic balancer is not in far enough. I'm pretty sure they are the same HT through to VSIII. I'd undo the nut and pull the balancer back out. Make sure the key is sitting correctly, and you put some ATF or oil on the seal. Tap the balancer in lightly with a wooden or rubber mallet and take it the rest of the way with the nut. Use 2 x pulley bolts and a big screwdriver to stop the balancer turning the engine.