I think I now understand what you are saying. The whole thing is making my brain hurt though 😆 The selector dog is fixed in the engagement positions by the indexing mechanism. Thus, you are saying that by correcting the misalignment by shimming the sleeve gear outwards relative to the selector dog, I am reducing the depth of dog engagement in the third gear position. Rather, I should reduce the length of the layshaft and then shim both shafts at the clutch side. That now makes sense.
However, doesn’t that depend on where the misalignment came from in the first place? If its from wear (ie the recess in the gear that I have assumed is wear in my third pic) then I should be OK as I am bringing the box back to the state it was originally. On the other hand, if the misalignment is due to the layshaft being too long due (ie tolerances stacking up when it was built) then potentially I have made things worse……
I thing I’ll stick with running the bike and see how it is. I will take your concerns on board and if its not 100% ok then will pull it down again and try shimming it as you describe. Even if it appears OK then I’ll pull it over the winter and carefully check wear patterns.