The grooves look fine. I would be more concerned with the shaft where the inner bearing fits. It looks a little distressed. It should be a nice slip fit with no play.I have cleaned everything up and to my untrained eye (I'm a retired jewelry designer and goldsmith) I think everything is ok except for both sets of bearings. The bearings that go on the axel with the larger inner diameter have the same slop as the wheel did. So those are shot. The other set are not spinning freely and you can feel the grit in them. The other area of concern for me is the grove in the axel for the collars. When you slide the collars into the groove all the way, should you be able to move the collars up and down inside of that groove?
You can easily determine the shim needed by bolting the housings together with no shaft of gears and measuring the bore axially. Then stack the new bearings and bevel gear and measure them then subtract that from the fist measurement. Then select a shim as close to that without eliminating endplay. Once together verify with a dial indicator.