1967 Atlas topend check

I took apart the topend on my 1967 Atlas last night to make sure all was ok before assembling bike and riding...The PO said the bike would smoke after warming up and he thought it was head gasket related...He had done a complete top and bottom end on the bike and only has about 70 miles on the engine..When I removed head and cylinder, I found that the cylinder has a spigot at the top and the head has a recess for it to fit into...I placed head onto cylinder without gasket and can see that there is too much clearance for the head gasket to seal....I am not sure what to do to correct this...I thought about filing the spigot to lessen the clearance but not sure if the spigot needs to seal against the head or not..I also got some rings with the bike that fit into recess of the head to allow use of newer style cylinder without the spigot...Another thought is to have the spigot milled off and use these rings with a regular head gasket....Any input will be appreciated as always..

Atlas should have a copper head gasket, if none is obtainable, get a Commando one and find a local engineering shop that will open the gasket to fit over your Atlas spigots.
If you mill the spigot off the barrel you will still have the recess left in the cylinder head.

I have 3 new copper head gaskets and an NOS set of rings to fill in recess in head...Main concern is how much to remove from spigot if leaving them...

Sounds like you have earlier year components than 1967 fitted here.

The usual course of action for these is to have the spigotts machined right off,
and use those alloy rings to fill the spigot spaces in the head.
Watch that the machine shop doesn't machine off too much off the surface in the last stage of removing the spigots,
it should only be VERY lightly skimmed. But has to be flat, of course.

You could also just file down the spigots enough for the head gasket to be clamped, as you say.
You'd have to be the judge of how much to remove, since we can't see how big the gap is.
Allow that the head bolts should be retorqued a few times after running, and the gasket will compress a bit, so don't stop filing too soon.

Had some time to look things over this afternoon and found that the cylinder had a fin repaired by welding and looked more closely at it...When I set the head on the cylinder without a gasket , it was touching in middle on both sides and a gap on either side , actually enough for the head to rock..And as Rohan said these parts were not for my year...I looked through the parts I got with the 2 bikes and found a correct cylinder for it which I will have bored to match the new pistons...When I put the head on this cylinder there are no gaps so I guess all is flat..i had bought a 1967 and 1966 from this guy and got an extra motor..I think he took cylinder and head from the extra motor and used it..