Importance of headshell and tonearm alignment

I own a Thorens TD166MKII with an SME 309 improved arm. I haven't been able to align the arm and headshell using a protractor. The installer tried to correct the problem by cutting away the rear section of the subchassis metal base to the point of leaving the arm base supported by the two front screws. This cutting allowed the arm assembly to slide further and slightly improved the alignment but it is still off. I can get true alignment on the cartridge if I use aftermarket headshells with slots which allow the cartridge to slide at an angle within the headshell. Does anyone have experience with this type of installation and can offer a solution? Should I be concerned with the alignment of the headshell and arm or just be content with getting the cartridge aligned?
Your arm was not installed correctly if you do not have enough room to slide the SME back all the way. You should have made a new armboard, or find a different cart that is not as long.
I agree with Pcosta, except I would use another headshell with longer screw slots to avoid disposing of your cartridge. I modified a Linn tonearm by elongating the headshell screw slots and it worked perfectly.

Fortunately the SME has a detachable head shell so the elongated slot "surgery" is not required in your case.
It is also possible you're using the wrong protractor.

The 309 was designed for different null-points than the Baerwald points used by many protractors.
I appreciate your answers, I will attempt alignment with a different protractor.
Print the free one on line and try it, just go to:
Aligned with two different protractors and obtained the same results.
Check your mounting distance... information should be here:
Mounting distance appears to be off yet the arm was initially mounted using a plastic plate intended for this arm and it matched the pre drilled holes in the base perfectly?
Not sure what you mean by a plastic plate, but if the mounting distance is off (you measured spindle to pivot point, right?) then the arm was not installed properly.
Print the free one on line and try it, just go to:

I downloaded and printed the generic Stupid Protractor, but the scale is off by about 10%.

Is there a secret handshake required to learn the inner workings of the Vinyl Club? I'll trade the secret to how Chris Angel levitates.

We replaced original tonearm with an SME plastic mounting board which is made for Thorens tables. Being that this board matches the existing predrilled holes on the Thorens no further measurements were taken. All was done under the assumption that all calculations and proper spacing had been handled as the board comes pre drilled for the arm as well. It was after all was done that we discovered the above mentioned problem.
My first experience of setting up an arm/cart was on a TD160 with a SME mounting board and adapter plate (in about 1980). I struggled to get the cart aligned. With hindsight, I realize that my error was in trusting the accuracy of the adapter plate - the pivot to spindle distance was off.

I suggest you measure the pivot to spindle distance and make an arm board that enables you to get that spot on. After that, cartridge overhang and alignment will be straight forward adjustments and your rig will be singing.
I used to have exactly the same TT very many years ago!

Try reading here. While the TT is a 160 (not 166) it may help. Setting up the arm:
IF the pivot-spindle distance is indeed 215,4mm as specified here then:

effective length is: 233,19mm
offset angle: 23,6 degrees
overhang: 17,8mm and, of course,
spindle-to-pivot: 215,4mm
Null points at 66 & 120,9mm

(BTW, looking at my old notes I used to have the distance @215mm as well)

Start by getting the spindle to pivot distance right; the offset angle cannot be adjusted -- but it should be correct (sme is a very serious constructor). Then align with correct protractor at null points. If you have already tackled overhang, aligning the cartridge becomes much easier.
Gregm, thanks for all the added info I will verify distance more accurately and then restart the process!