Originally Posted by GCRyder

What you're describing are just the holes in the bottom bracket cups. The spindle is not supposed to make contact with them. It runs on, and is supported by, bearings that are rolling inside the cups. If the spindle has play, those bearings aren't tight enough on the cones of the spindle. You don't adjust this with the fixed, drive-side cup. The adjustment to tighten them is done with the adjustable cup on the non-drive side. From your description, it sounds like you've fully tightened the fixed cup, but still need to take out the slop by tightening the adjustable cup. Here is a link to Sheldon Brown's article showing how that is done. If the play can't be adjusted out with the adjustable cup, or if the spindle won't turn smoothly once the slop disappears, then the bearings are probably worn beyond their limits. Replacing them takes about 20 minutes, 22 ball bearings and a few globs of grease. I suspect that will be needed, since it sounds like the spindle has been running so loose that it's ground against the cup and enlarged the hole. But these are simple and surpisingly forgiving devices.

Of course, if you have a cartridge-style bottom bracket, the slop means you'll need to replace the bottom bracket. The article, and pages linked to it, will help with that, too.