izze - The two-piece shaft is intended to allow you to remove the distributor and leave the lower shaft in the engine. You want just a bit of wiggle so that the lower shaft slips into and out of the sleeve freely. If it's too tight you will have trouble installing the distributor into the engine, and may pull the lower shaft out when you remove the distributor. Of more import is how the notch in the lower shaft fits onto the blade of the upper shaft. That needs to be such that there is no rotational slop, otherwise your timing will not be solid. As long as the lower shaft slips into the sleeve, and you can't rotate the lower shaft relative to the upper shaft, you should be OK. If not, new shafts and new sleeve may be in your future.
I've had the opposite problem - lower shaft (especially modern replacements) fitting too tightly into the sleeve such that the notch won't line up. I've had to turn just a hair off the diameter of the end of the lower shaft to make it fit properly.