300e timing marks won't line up. Valves seem to hit the pistons.

[Turbo E320]

Did the headgasket on my 86 300e and put a rebuilt 89 head on it. When lining up the timing marks I lined up the balancer's "O|T" mark which is located between the 40-30-20-10-OT-10-20-30-40 marks and attempted to line up the two timing marks on the cam when it stopped and wouldn't go any farther. I turned the motor a bit then the cam aligned and the opposite happened, the motor wouldn't line up because it refused to turn at about the 20 degree mark.

What gives?