Travis -
I ran into this problem with my 261 about four years ago. Same issue. The balancer would move back and forth when the engine was off. Mine actually made a clunking noise. That's how I found out I had a problem.
I would do what I did - pull the balancer and find another to put on. I wouldn't mess with the hole drilling and tapping. It might not fix the problem. If you have another balancer, I would not waste a minute trying to make the one you have work. The end result may not be what you are wanting and it could still fail on you. I would put on one that works like it is supposed to and nothing short of that.
Send the broken one to a balancer repair place, let them fix it and keep it for a spare.
Just my opinion.
Joe
