Update, the spacer bends against the bottom of the cassette when torqued causing it to spin off axis. Ghetto fix has been to install it behind the hightest gear instead and although not ideal at least it works.
However,
There is a noticeable low pitched grinding sound at higher gears, very obviously different to usual drivetrain noise. This is different to the higher pitched grinding (https://tacxfaqx.com/knowledge-base/grinding-sound/) Also the pedal stroke is not smooth, resistance feels varies at different stages of the stroke.
Nothing but trouble from this unit so far...