I am going to assume that the temp drops to normal when driving on the highway. If so, then it sounds like air flow. the best fan/shroud/radiator installation has the fan a minimum of 1/2 its hub diameter away from the radiator core, followed by a shroud that comes as close to the blades as possible. Moving the fan close to the radiator only moves air in the donut area where the blades are.
your description of no shroud and fan far away from the radiator means that the air is simply swirling around the blades and not moving thru the radiator. if at idle, a piece of card board can not be held against the radiator face by the air, you simply do not have enough air flow.
My recommendation is to simply add a fan shroud, and do not use a spacer. build the shroud to come out to the fan. If you do not want to do that, then remove the engine fan and go electric. with what you described, the fan is doing nothing more than robbing power and making noise.
If on the highway you are not running at the temp your thermostat is, then in addition to air management issues you have either a plugged core, or bad water flow.
