I was told that if i took my dana 18 off my 1953 willy, that a dana 20 would bolt right up. I got the dana 20 and now when i go to bolt up the 20, it doesnt fit because the shaft from the transmission hits the rear output shaft inside the case. Whats the deal?

Not sure about the answer to your question but here's a guess... You're trying to mate a big hole D20 transfer case with a small hole bearing retainer on the transmission. The fix for this would be to replace the transmission bearing retainer with a big hole model.

Agree with Zippo, your '53 should be a small hole transfercase, and all D20s are big hole. You need a different bearing retainer. As for what is hitting the output shaft, what nut are you using? I think there are two different ones on D18s. The larger one may not work with the D20. See if you can find a smaller one.