welcome to forum,
are you using the aluminum washer that goes in front of that screw for the 2 speed spur gears?also theres thrust washer between the 2 spur gears.check if thats in place.
now my other questions is have you disassembled the 2 speed? i ask since if you don't place the hub and bearing in the right spot on the shaft, it will be off a bit and when you tighten up everything the gears seem to bind,had this happen to me on my old 2 speed.
and the last this is it binding to the point you cant move the gears by hand? if it's not and you can move them by hand try to run it a bit to work out anything thats binding it up , i did that couple times with no issues,but only run it for about 15-20 seconds just to get the gears to turn over a couple times.
red loctite would be best, but i have used blue loctite with no issues,either way let the loctite dry so it does it's job.