OK, first of all I have read a bunch of posts regarding hood alignment but none of them seem to cover this topic.

I recently had the engine out of my '68. When I removed the hood, I was careful to mark the bolts so that I could realign the hood. After putting the hood back on I can get it line up with the fenders but the passenger gap is 5/32" and the drivers side gap is 9/32". How can I move my hood laterally? I have tried taking the bolt hole slack from the hinges but it does not work. i am flabergasted because it was aligned well before I took it off and I didn't touch the hinges (that I remember!).

The holes in the hinges are pretty big, giving you side to side adjustment for the hood. The header sets the hood opening width at the front. Shimming the side of cowl bracket sets the width at the rear. The rubbers that install on each fender tend to centre the hood as well. It can be tedious getting things right. Our el Camino came home from the bodyshop with the passenger fender too far to the rear, causing a tapered gap across the front. Getting the doors and fenders all fitting together can take a LOT of time. It is best to do it before painting the car and keep track of which shims go where. I've seen door hinges dowelled to the cowl and door for location when the car is being taken apart. Makes re-assembly a much easier task. By the time you get your first car done, the second one will be half the headaches......maybe.
Scribing a line around the hood hinge bolt washers before removal rally makes re-assembly a breeze. A little too late in your case though.

Put a thin shim behind the front hinge to fender bolt on the tight side, it should move right over.
Ron

i dont know if this is correct, but when i got the car back from paint and body shop, i complained about the same thing. The guy just gave one side of the hood a lateral push and that worked wonders. He kind of 'worked' it into place. I guess the hinges just realigned by him doing this.

Loosen the side thats too wide, grab ahold of hood pull it towards you and retighten the bolts.
If you need more go to the other side loosen the bolts, push the hood away from you and tighten the bolts.

In the past, what I would do to solve that same problem was to loosen the two lower bolts, push the hood in the direction I wanted it to go, and then tighten the bottom bolt on the hinge nearest me while pushing on the hood. I would then tighten the other lower bolt. :)

UPDATE on this.

I finally got this straightened out. I started looking closer, and I don't think it ever really was right. My X measurement showed that the front pointed to the drivers side. So I fixed this, and then used every bit of hinge hole to make it right. It looks good enough for me! Thanks for all of the replies. You guys are awesome.