My gas tube won't go in the upper receiver when barrel nut is torqued. The alignment rod that is used to align the holes in the barrel nut will (with the upper receiver adapter that you put in a vice to hold the upper receiver) that you use to align the holes will when torquing the barrel nut. The gas rod is .171 diameter with a short section on the end that is .179 and the alignment rod is .175. With the barrel nut aligned as best I can could, do I use a no. 15 drill bit which is .1800 clean up the opening in the upper receiver so the gas rod will go in?

Does the gas tube go into the receiver without the barrel nut? If so, your timing is slightly off and you need to better align the teeth on the barrel nut (I'm assuming you're using a standard barrel nut). There should be no reason to drill the receiver.

Simply test fit the gas tube as you tighten and stop when it's aligned and the gas tube will slide into the receiver (make sure your torque is above 30ft/lbs).

It will go in the receiver without the nut and go through the holes in the nut. It will go through both together if the nut is not torqued. The alignment rod will go through torqued.  Yes the tube is inserted the correct way, I have already built one upper with a Black Hole barrel, this one is a stainless from Palmetto State Armory and the receiver came from Brownell's. I  know I shouldn't have to open up the holes but I don't see where opening it up a few thousands will affect anything because the end of the rod is inserted into the bolt and that fit is critical.

As long as it stays above minimum torque, I would back the barrel nut off slightly and slowly tighten a bit at a time while test fitting the tube as you go. If it aligns prior to applying torque, it should align torqued assuming the timing is correct.

If backing it off brings the torque below minimum, you'll need to torque it to the next tooth (which will put it near to or above max torque). Other options would be to shim it, lap the face of the receiver or use a different barrel nut. If you're having to drill it, that likely means the barrel nut isn't properly timed and will potentially be putting tension on the gas tube that could lead to binding between the tube and gas key.

^ This right here. But if you absolutely feel the need to modify a part or are trying to maintain a very specific torque value (not range), you can grind an offending tooth off of the barrel nut to eliminate the interference. Barrel nut is much cheaper than a receiver. Other than that, I cant see why the gas tube would fit pre torque but not after unless a barrel nut tooth was interfering.

So the barrel nut has holes and not teeth?  If you want to open it up do it to the nut and not the upper.  Do not drill through both.  It shouldn't hurt to open up a hole in a nut and if you screw it up it will be the least expensive fix.  Guys have removed teeth from mil nuts to achieve torque value.  Another option is to shim if you can't get alignment.

The hole in the upper is sized to limit the movement of the gas tube when cycling.
When you have the gas tube through the hand tight nut does it go into the gas key properly?

Had family in over the weekend so just getting to answering. The gas tube goes through the hole in the front of the upper properly not tightened. The nut is timed because the alignment rod will go through both when it is torqued. I have shims to achieve proper timing. Somehow when the nut is torqued, it is out of alignment not in the timing but off center. I think the suggestion to open the hole a little in the nut is the best solution. The nut holes may be off specifications a hair because I at first suspicion-ed the upper receiver because it is a budget oriented one. So I purchased another from Brownell's and it did the same. That pretty much eliminates it as the problem. I will measure the diameter of the gas tube and compare it with others before I do any thing. The upper receiver hole as stated needs to be pretty close to hold the end of the gas tube in the proper location to engage the bolt gas rod tube. The hole in the barrel nut is not critical. Would not want to open the hole much, just a few thousands, because it may weaken the nut.  So I think I will mark which hole is questionable and open it up slightly then try again. (after checking the gas tube if it's OK) No it is not notched, it's for a free floating hand-guard. There is going to be night vision scope mounted on when it is ready. The other upper with a Black Hole Barrel has a Leupold scope and the lower has a light Timney Trigger, collapsible stock.

Put the barrel nut on just hand tight and then line up the gas tube hole.  You may have to wiggle it around but if you get the gas tube pass through then it has to be a timing issue.  More or less shims with more torque on the nut.  Lots of youtube videos showing to shim a barrel that doesn't line up.