Rear Hub Rebuild - Help Required!

Good evening all. I hope a member or members can help me out with something I've been tearing my hair out with.
I've been the owner of a Norvil Commando in MK11A spec for a few years which was acquired on Ebay. It was built in 2006 and the previous first owner had only done 250 miles. It's used by me on high days and holidays, only showing around 4000 on the clock now. 
I took it out last week and unfortunately suffered a rear wheel blow out. No real dramas but as a result decided it was time for new tyres and tubes etc.
I pulled the rear wheel off for the first time, and when doing so noticed that the inner lip of the double row bearing at the brake drum side of the hub had sheared off in several places. There was no major swarf around but the bearing was gritty and clearly needed replacing. I'd be forgiven for thinking that it had originally been driven into place using the inner race when built but I'm sure it wasn't!! However, it's difficult to imagine what force could have done that.
I'd mention here that the rear hub used by Norvil is the Pre 1971, brake drum type. No cush drive. The hub being attached to the brake drum on 3 studs with long nuts.
Removal of the old bearings was the easiest on any bike I've done using the combination of front and rear wheel spindles as described in the workshop manual, Haynes, Norman White etc. Replacing with new bearings obtained from Andover with a little heat was almost as simple as well. I marked up the bearing tube to confirm its orientation, ie. long shoulder to the speedometer side of the hub, and short shoulder to the brake side of the hub. The new bearing measurements were identical to the ones removed.
All the re-assembly was done in the correct order per the workshop manuals.
I bolted the completed wheel assembly onto the brake drum. The hub bolted flush and square onto the brake drum on the 3 studs and their shoulders. Speedometer gearbox fitted over the single row bearing lock ring etc, with everything ready to accept the rear spindle - except now the rear spindle spacer appeared to have gained 7mm overnight! There was no way the spacer was going to fit in without seriously trying to spread the swinging arm so something was clearly wrong.
Nothing had been touched by me on the brake drum side of the swinging arm, ie. that was left in place with chain still attached etc when the wheel was removed.
My thoughts immediately turned to perhaps being tired I'd actually put the bearing spacer tube in the wrong way around, so today I dismantled the hub again, taking the new bearings out and no I had put the spacer in the correct way. I put it all together properly again, this time with a friend sense checking me and the same problem as before. The wheel spacer won't fit in after the wheel is bolted onto the brake drum. We repeated all the steps again and same issue happened.
I'm totally beat. I am even considering turning the bearing spacer tube the other way around, contrary to what all the manuals say, but I'm sure 3 different workshop manuals can't be wrong over the bearing tube orientation.
Can anyone point me in the right direction as I've run out of ideas, Help please!!