Of course you can still use the spindle. Why not? To the Grease Guard System: In the configuration the bearings where mounted on your merlin, this is completely wrong. The outer bearing seal is removed, the inner one not! It has to be the other way round. But if you want to use it, you have to have the Grease Guard seals also. Those are white/black rubber rings that are placed on the pressed on shim on the spindle. You then have to use standard bearings with only one seal (outside!) or remove one seal, if they are sealed on both sides (RS). If you push the grease with a grease gun through the port, the Grease Guard Seals will prevent the seal from moving further inside. So it will be pressed into the (unsealed) bearing and will be pressed out on the outside through the seal. If you do not have the big Grease Guard seals, you cannot use the system and should use double sealed bearings. The marks on the pressed on sleeve seem to show, that you have the seals, right?
I do have exactly the same system on my 91 Merlin and have done it this way.