It does look like the small wear pattern, but as far as I know, there is no adjustment for that. That is dependent upon the relationship between your flywheel and the starter mounting location. As far a the SBFs, those are set by the bell housing and engine plate and are fixed in location. I don't know if they make offset bolts to correct that or not (kinda like how you would center a bell housing to the crank with offset dowels).
Just guessing here and maybe someone else will chime in with the right answer, but you can ask PowerMaster if they have a slightly larger drive gear to increase gear mesh/engagement...???
Edit: Doing a little research - it looks like the FE's used different size flywheels for different blocks. You should count the number of teeth your flywheel has to be sure. Since you have the starter off, mark one tooth with liquid paper (White-out) and slowly rotate the motor with a wrench on the crank bolt. Count the teeth until you get back to your mark. That way you know for sure.
Here is a link
(Clicky) from ffcars forum that talks about BBF starters/flywheels/bell housings. I don't know if the difference is just the size of the mounting plate, bolt hole locations, or depth of the drive gear. Check yours to make sure you have the right one. Also, you do have the motor plate installed between the block and the bell housing, right?