No, stop now, before something is really knackered, like the thrust bearing or the tranny front pump...
It sounds like the torque converter isn't correctly installed, pull the engine back out, if you have a
beam type torque wrench, put it on the balancer bolt, how much torque is required to turn the engine?
If the tranny is properly installed, you shouldn't need any more torque applied to the balancer bolt to
turn the combination of the engine and trans over...