I thought there needed to be an 1/8th inch clearance between the flex plate and TC. Am i wrong? Also the problem has not persisted but i still havent taken it on the highway. Also can shuddering be caused by low trans fluid? I did not have any of these problems before the trans swap. Both are 94k1500 transmissions. Did not reuse old tc either.
Yes, 1/8" to 3/16" is what should exist between the flexplate and TC mounting pads. and its not something you should ever need to adjust. So when you say the installer "didn't get the spacing right" it implies there is some sort of adjustment procedure that has to be done when there isn't.
Shuddering can be caused by low fluid as can slipping, delayed engagements, slipping, flare shifting, tie ups and a host of other problems...if fluid is too low, you wont move...
Transmissions dont make knocking sounds, that is something else..like Schuekey said, check your flexplate (cracks) and TC-Flexplate bolts (loose). Make sure you dont have either problem before driving it again (if you havent already). Also rule out the engine itself as the knocking source.
If you have done all those things and all is well, take it on the highway and see what happens.