You didn't set it to 1/8" or zero TOLERANCE, that's CLEARANCE!!
Tolerance is how big an error you are willing to accept in your setting!
I usually set the clutch to where I can freely turn the rod but not get
noticeable end movement. That'll give you maybe 1/2"-3/4" play at the pedal.
(After the slop in the linkage and the "no push" distance in the master cylinder
is taken up)
When the clutch is engaged there is no relative motion in the pilot bearing
so it can't make any noise then. If you are getting noise with the clutch
engaged in lower gears, that is almost certainly gears or bearings in the
tranny. The pilot bearing is only active when the clutch is disengaged or
disengaging. And if it is binding, rough, or some such, it WILL cause drag or
noise or both. To tell throwout bearing noise from pilot bearing noise, the
throwout bearing will make noise as soon as you put ANY pressure on the clutch
but the pilot bearing will not make noise until there is a difference in speed
between the crank and the pilot shaft, or in other words as soon as the clutch
is not completely engaged.

Not being from PA and only by heritage from WV (my dad was born there and lived
there until he was 7½ years old)I'd have to say that for MY max enjoyment it
needs to be 55-85°F and dry and maybe slightly overcast (not too much sun).
I have worked under cars lying in cold wet puddles, etc. Amazing how fast you
can get a job done that way, especially if the puddle is snowmelt.
--
George Downs, Bartlesville, Heart of the USA!