First off this is a "Howse" brand rotary cutter. Not a "Bush Hog" brand rotary cutter. You confuse people when you use others brand names as a generic name.
I am just guessing and may be wrong because you did not give us a model number. So this is like trying to find parts and give advise on a "blue" car. BUT...........
The bearing goes next to the snap ring. There is no reason to space the bearing. So if the bearing goes where you have it pictured they would have just cut the grove over there.
I must be missing something because it looks like a bearing in the housing and then you put another bearing on the shaft.
I'm thinking the bearing gets pressed into the housing cover. The shaft then gets pressed into the bearing and a snap ring goes on top to hold the shaft in. Then the gear gets pressed on with another snap ring on the bottom. This holds both the gear and bearing in place in relation to the housing cover. The backlash is adjusted by adding more gaskets/spacers where the housing cover bolts to the housing. At least that is how it works on the Howse gearbox in the picture below. It may or may not be correct because this may or may not be your model.
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