Yikes, gotta be careful with these forums and some of this wild guessing nonsense.
Couple of points, albeit already made:
1. 5VZFE Is a non interference engine. The relation of the cam and crank gears have zero to do with OP's problem. If the crank doesn't spin, you have another problem.
2. Timing is correct on this engine, but the marks are there to set initial timing only. Timing a 5VZ is super easy to do; Set the crank to zero, both cams straight up, and viola! Once the engine rotates one time, the marks on the belt are no longer relevant.
3. The torque converter has to be "double seated" in the transmission before you drop the engine in. The end of the converter has two notches, that correspond to "pegs" on the front pump. Converter looks like this:
http://images.oreillyauto.com/parts/img/large/pro/to40b-1.jpg. It doesn't go in "unevenly" while seating it, it either clicks in or it doesn't. This is why you never bolt the trans together unless the bellhousing is FLUSH with the trans by HAND. Even if you don't think you moved it....check it. Not doing so will lead to major binding (Op's ACTUAL problem) and often times a broken front pump. Can't tell you how many of these I have personally fixed from other shops who know nothing about Toyota's.
4. Once the engine is dropped in, the torque converter should spin freely by hand without binding anywhere on the flexplate, or anywhere else. You will end up with about 1/8" or so space between the flexplate and the torque converter if you did it all right. This allows you to move the converter to line up with the bolt holes.
5. The rear driveline connection to the trans/rear end has absolutely NOTHING to do with the torque converter, and having it connected will not stop it from turning even if the truck is in park. If it did, how could the engine run with the truck in park/neutral/in gear without a clutch?
SST221 Confirmed what you said, and I am backing up his confirmation, as well as confirming the converter was the problem. Hopefully you did not damage the front pump forcing it together (btw this is why you NEVER EVER EVER force them together!!!!)