I wasn't able to get the cart as far back into the headshell as I'd have liked, but I did move it back about 3\16". When I moved it back far enough to align the needle with the front edge of the headshell it would not slip onto the tonearm. As it was it took a bit a finagling and trepidation getting the headshell on and the contacts working properly.I had to fix the tonearm end once as it is and figured getting lucky twice on this was pushing it.
The good news everything is set to a point to start listening and the great news is the mid range distortion is gone.
Getting everything setup on the 698 makes me appreciate the engineering on the VPI all the more. Especially the VTA on the fly adjustment, but in reality it was fairly straight forward for a 40 yr old table.
Time to let the vinyl spin!!
Maybe someone modded it in the past. If so, they did a great job with the workmanship. Picture below is before moving the cartridge back in the headshell:
I suspect that your headshell was modified...At some point, the plastic headshell mount must have snapped off and a repair was done.
A word of caution: don't overtighen the collar when reinstalling the headshell. The old plastic tends to be brittle and if it breaks, it will really ruin your day.
I don't even feel comfortable lifting the tonearm out of the holder using the arm on the headshell fearing that it may break as well.
how many grommets are there total?

Can someone explain how to set vta on this 698? I just removed a Denon 110 and installed my Ortofon M20fl and the arm is no longer level making the bottom of the cart angled down. It sounds like maybe there is a set screw that I can loosen and I guess manually lift the arm support up and then retighten? Can't find the setscrew though.