I need to move the crank sensor 7mm, towards the engine or towards the wheel?

Also, do I need to modify the starter to get it to engage or do I need to do something else?

 

If it grinds, then you have to grind down the starter and elongate the bolt holes, so you can move it closer to the flywheel.

I don't have any spacer on my 1st gen fidanzas. In fact, the timing ring was falling off one of the flywheels, b/c proper tq/thread locker wasn't used on the ring, and it still worked perfectly even though it was completely cockeyed. Maybe it's a YMMV thing, idk.