We folks, I may be onto something.  I removed the new starter motor.  The teeth look fine.  It does not appear to be the problem.  I checked the plastic fan.  It was rubbing hard on the top of the inside radiator shroud.  I removed the top of the shroud and notched it out so that it could fit higher up.  The engine still will not start as the new starter bendix kicks it out every time it begins to fire.  I ordered a high torque starter yesterday.  I have one on my Healey 3000 and my 1968 Cooper S and they work great.  Should be able to start by the weekend.

Dogscarf

+1 for the starter.

What is the horrible racket? Squealing or rattling? Grinding or thumping? 

If you think it is the belt, remove it and run the engine for a bit to see if the noises and smell go away.

Taking the starter motor out would be the easiest on your list to check out. Inspect for damage to the teeth on flywheel and starter.

Fellow Minioids,  I'm having a hell of a time starting my 1275 engine on my 1965 Mk1.  It is totally rebuilt, new pistons, cam, lifters, bearings, clutch, cylinder head, gearbox and more.  All clearances were carefully measured upon reassembly.  The engine spins over fine on the new starter motor and builds oil pressure just fine.  Once the engine fires there is a horrible racket.  I cannot tell where it comes from and there is a terrible burning smell.  I shut the engine down right away after a few seconds. 

1.) I am thinking that there could be some clutch issues with a new light flywheel, pressure plate with the disk. However, I triple checked all clearances upon reassembly. 

2.) Also, I'm starting to wonder if it is the fan belt being miss aligned with the water pump and alternator.  It is not in a perfect vertical plain with the water pump but off 1/8".

3.) I wonder if it could be the starter motor stays engaged.

Any thoughts would be helpful.

Dogscarf