Lost all hydrolics and the pto....

So I pulled the long pto shaft out of the back of the motor. It is fine, measures 67 and 5/8&quot; like it should. The plug that is behind this shaft was worn down pretty good it looked like so we replaced it. Question  is if the shaft can back our of the spines in the back of the fly wheel. It appears that is what originally happend, the shaft simply worked it way back and out of the front splines.....How can it do that?  Even when the plug and snap ring are in place? 

SO what is wrong here, I didn't want to push the plug tight upagainst the shaft as it would have been past it's O ring seal. So where is all this clearance comming from? The shaft appears to be going too far forward?

Stumped, Kirk