The flywheel can only work if it is held securely in a fixed position on the crankshaft. That requires perfectly rectangular keyways in both crankshaft and flywheel, with a tight-fitting key. If the keyways are mangled (and it sounds as if both of them are at this point) you need a new crankshaft and a new flywheel.
See if you can file off the burrs (which you should have done in the first place) and get the original key to fit tightly in both parts. If not, I don't think it is worthwhile replacing the crankshaft (and probably replacing the flywheel again). Best to toss the engine in the skip and chalk the whole thing up to experience.
