Problem is, the engine is already mounted

 

Then chems, and drive it in a bit, to get it to break loose. Don't drive it in too far though...... then a puller should be able to yank it out of there.

 

Douse it with penetrating oil, then start light tapping it... Might take 30 minutes, but once it lets go a little, then slide hammer it out. Just need to break it loose.

 

So we all agree this is a bushing?

 

Yup.

 

Alright now, since the engine was already mounted I went ahead and bought a 2005 3.7 4x4 liberty engine this time which supposedly is the perfect fit but when I checked it out beforehand i recognized it has the same spacer in the same place. Junkyard guy was able to get it out but said that he never had to do this for a liberty/ram swap. Now I'm starting to think that maybe my transmission is not original? I have a 45rfe transmission in my ram. Would that spacer make the difference between a 4x4 and a rwd engine?

 

That's just a pilot bushing to accommodate a torque converter with a smaller alignment hub. The torque converter specified for the trans in that liberty must have had a smaller pilot diameter so instead of producing a new torque converter, they just machine an inexpensive bushing.

I show a diameter of 1.810" for the 45rfe vs 1.500" or 1.337" for what is probably a 42le or 42rle in that particular jeep. It actually has a staggered pilot which is why 2 diameters are listed.

You should be able to pull that bushing out with a pilot bearing puller.

 

That is pretty efficient, machine the end of the crank for two snout sizes, and get the middle size by inserting the bushing.