1978 Chevy Camaro New starter eats teeth, wont start engine

Engine Mechanical problem
1978 Chevy Camaro V8 Two Wheel Drive Automatic ? miles

The starter began acting up a few months back...only working half the time. Eventually it wouldn't crank the car...it would make a god awful noise (wheeeeeee) but not turn the flywheel. I took the starter off and had it tested. It would run...but the sprocket thing wouldn't move up to engage. Bought a new starter. Once on it cranked. Took it off the jacks and drove around, then parked for the night. Next morning...wouldn't crank. Heard the "wheeeeee" noise again. Figured it worked itself loose and needed to be shimmed. Tried that...it cranked. Drove around then parked it. Next morning..."wheeeeee" noise again. wouldn't crank. Tried to re-shim. Now its shaving parts of the teeth off the fly wheel. no matter how I shim it...it won't turn the flywheel more than 1/8 a turn. The big cog in the starter only covers about half the width of the flywheel. I really don't know what to do. I've shimmed the thing 20 different ways to Sunday. No shims, half shims, one, two, three....six shims. nada. I cannot physically make the flywheel turn. Should it? I don't understand what the deal is. I'm new to working on cars...but it doesn't look like this should be as difficult as it currently is. Any help would be greatly appreciated.
Jason