I would leave the motor block and wire clip out entirely. This will allow a wider range of motors. Options to retain the motor are to but an Estes screw-on retainer, make one from a suitably sized plastic bottle, rig some sort of clip that screws onto the rear centering ring or just friction fit the motor with some masking tape. To keep the motor in place on boost, all you need are a few wraps of masking tape. If you use a screw-on retainer you will have to trim the tape thrust ring so the retainer will seat.
The 1" is the spacing from the top and where you put the glue. The 3/16 is the position you mark on the engine spacer tube (same size as an actual engine) that is used to push the block in from the bottom. Perfectly clear to me.