* Different Bellhousing Bolt Pattern: The most likely culprit. While both engines are small-blocks, the bellhousing bolt pattern on the 305 engine block may have changed slightly between 1979 and 1981. The transmission's bellhousing needs to match the engine's bolt pattern for proper mating. Even a small difference in bolt hole location prevents the transmission from bolting up.
* Flexplate/Flywheel Differences: The flexplate (automatic transmission) or flywheel (manual transmission) bolted to the engine also needs to match the transmission. A mismatch could lead to clearance problems or improper engagement. The 1981 engine might use a different flexplate than the 1979 transmission is designed for.
* Output Shaft Length: While less common, there's a small chance the output shaft length on the 1979 transmission might be slightly different, causing interference with the 1981 engine or drivetrain components.
* Internal Transmission Differences: Though unlikely to prevent bolting, there might be subtle internal differences between the 1979 and a later-year TH350 that could cause compatibility issues if you're aiming for a perfect, problem-free installation.
In short, while both are GM small-block V8s, subtle changes in engine design between model years often lead to incompatibility with transmissions designed for earlier or later years. You'd need to verify the bellhousing bolt pattern on both the transmission and the engine to confirm this is the problem. A comparison of the flexplates/flywheels is also crucial.