Thanks for everyone's input. I moved the shim to the location shown in the shop manual and the noise disappeared.
I still have some rear tire noise. The PO had recently put new Continental Conti-Touring tires on the front and had older Yokahama's on the rear. I noticed when I put the tires/wheels back on after all the subframe work that the tires are directional. They were on backwards. I turned them around so they are rolling in the right direction. Would that matter?

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1987 300D 146K Original #14 Head
One eye on the road, the other on the temp. gauge

Gone But Not Forgotten
1983 380 SEL Long gone
1983 300SD Wish I hadn't traded it in on a 90' Corvette
1989 300SE My all time favorite
1995 E420 Went like a bullet