YES!!!IT IS BAD!!!
I did that with a TH 400 and all I did was back it out of the garage ONE TIME....I didn't know it until later, but it busted the center support on the trans case on the inside and pushed everything fwd into the crank ...So I ruined a short shaft 400 case and the thrust on my crankshaft. I hope you have not hurt yours. How I found mine was,My tranny started slipping and when I went to remove it, the crank slid back and forth when I removed the torque converter bolts.....I was 18 years old at the time. I learned lots of things the hard way. Get that shaft out of there.