I went through similar problems with my 1940 when I put in a '55 235. Check out the lessons learned I wrote up here:
http://oldgmctrucks.infopop.cc/eve/forums/a/tpc/f/462107036/m/4471020781

After trying the short shaft water pump, I went to the adapter plate and 53-54 216 water pump and everything worked fine.

Here is a pic with the short shaft pump that was too low:

http://rides.webshots.com/photo/1479818654067858381yEqjEk

Here is a shot of the motor installed with the adapter plate and '53-'54 pump.
http://rides.webshots.com/photo/1506214624067858381lUqIIS

Steve

See my 1940 Canadian GMC:
http://community.webshots.com/user/ndnchf