Hi Corduroy,
I don't think the torque is your issue. I tighten that nut up with a rattle gun (so that I don't have to stick some wood in the reel). It should be tight and should not restrict the movement of the reel.
Check that you have the bearings and domed washers on the correct way and that you haven't mixed up the top bearing caps. Post some pictures if it still gives you grief
