Finally figured it out - troubleshooting can be very confusing.
Turns out the noise was the nose of the starter gear rubbing on the spinning flywheel because the ignition switch wasn't snapping back from the start position when released.
The confusion of why it was doing it only when you went thru neutral - the car has a neutral safety switch/relay and in neutral, it would energize the start circuit and the motor would spin, when you left neutral, the circuit would break and the motor snap back to the park position. With the ignition switch hanging up, it would supply power to the neutral safety circuit full time, allowing it to do its thing.
Cheap import switches
Big shout-out to PowerMaster starters being able to stand up to this punishment.
Now to find a switch that will hold up. 2nd one to go bad in 5 years. Hope this helps someone else.
Anyone have a suggestion on a quality ignition switch? Car is 'period correct' so it needs to look like the Lucas style on the outside dash side. I've tried the cheap chinese imports and Dorman (which is also an import and the one that has failed twice) Considering Cole-Hersee now, but it is probably an import also
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Thanks for the group support.
Paul