Did you grease the gears and follow the
instructions?
Lack of grease magnifies the effects of friction on the system, which reduces efficiency and accelerates wear, as well as cause the symptoms you describe.
When you say "the collars of the bearings are on the wrong side," do you mean that the
flanges are on the wrong side? If that is the case, then you will indeed run into issues because 1) the bearing's effective depth inside the gearbox will be different and 2) the bearing will eventually slide off the shaft because the flange is not retaining it.
What did your mentor mean by a "preset torque setting"?
As we all know, a low Center of Gravity is a beautiful thing. - Andy Baker [more] 
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