My issue is currently in the hands of a few different people, but I figured I would throw it out to everyone here.
Background: rebuilt rims, powder coated, stainless Buchanan spokes, All Balls bearings. Laced well and trued with proper bearing install from known forum member (all well there, I've been chatting with him too).
Issue: rear wheel binds if axle nut torqued. I have to back off and find a sweet spot to allow wheel free spin. Initially thought it was related to new bearing stiffness, but I think it's something more. Bearings are broken in now. While doing chain adjustments... if nut torqued down properly wheel binds, starts making some bad sounds, and eventually axle itself will rotate with nut if I attempt to keep torquing. I am torquing by hand with 12" crescent wrench.
As far as I know bearings are properly installed and all spacers are in place. Bike is back at my mechanic (local Honda shop with known vintage techs) for evaluation. I can not say 100% what model the 750 rims, hubs and brake panel cover are off of, but they should be correct spec for my K3. Same goes for installed spacers and actual axle. No issues with front wheel.
Any guidance here? Current axle nut pic attached.