Vintage Peugeot conversion help and tips please

Easy- just tighten it down. My bike is 126mm rear spacing, running on a 120mm track hub and it's fine. You don't really even need to cold-set the frame (what Sheldon Brown mentions) as steel can take it fine.

or simply add those extra spacer to make up the space, I did that when my track hub was 120 and the Pug was 126, a couple spacer and bingo was his name-o.