Al,
Firstly, it is very risky to try to re-align a Douglas crank without first removing the plugs in the crankpins. With these removed, you should then be able to insert test bars into the crankpins and they should align with the corresponding holes in the other crank web. Without using this method, it is possible to get the main shafts to line up but the whole assembly may still be out of balance. Let me explain! If you look at the front of the crank (with the centre web horizontal), the front web could be rotated slightly in, say, a clockwise direction - resulting in the mainshaft being high but only displaced a thou or so sideways. If the rear web is similarly out of place in an anticlockwise direction, the whole assembly will appear to be running fairly true, but will be out of balance due to the centre web being offset from the centre of rotation.
Loose front main bearing bushes are not unheard of, but are unusual in machines up to and including the Mark 3 Sports. strangely, the resultant wear seems to take place on the outside of the bush rather than in the bore of the crankcase, so replacement of the bush should not cause too many problems. If you have a new bush made, do not attempt to reduce the running clearance to obtain a quieter motor - the clearance should be 3 thou, otherwise you risk the chance of it nipping up on the crank and turning in the cases (resulting in another strip down).
Moving on to the endfloat on the conrods - originally it would have been in the region of 5 - 10 thou, although this is not critical on the Mark series. Providing the crank has not been modified during it's life, it will have plain parallel pins, so it is possible to press it up a little more to restore the correct endfloat (only do this if you are confident of your abilities!).
Now down to the 'rumble'! It could have been due to the bush being loose in the cases, or more likely, due to the timing pinion not being pinched by the butchered nut on the crankshaft. If the pinion was able to move, the key would be likely to get hammered, resulting in the knock/rumble increasing quite rapidly.
Lastly, the broken lugs on the barrels. With the cylinders sticking out, any 'coming together' with the road or a roadside obstruction can cause damage to the heads and barrels, but what is not so obvious, is the damage it does to the crankcase. Whilst you have the engine stripped down, I would reccommend bolting the crankcases together and getting an engineering machine shop to check the surface for the barrels is still flat - if not, get them to skim it to a minimum cleanup. This is the only option - just replacing the barrels will only result in more damaged barrels.
Hope this helps sort out some of the problems - get back to me if you need more advice.
Regards,
Eddie.