Thanks RLY for your post. You guys know more about these bikes and I appreciate the help.
To get the wheel back on the frame, I had to pull the rear apart to get it back on. I am thinking maybe the previous owner had messed with the frame maybe? My understanding is that the Shimano 7 speed hub is an original option on the bike? In another thread http://www.retrobike.co.uk/forum/viewtopic.php?t=191713&postdays=0&postorder=asc&start=15
a member did mention a 120mm hub and I just assumed he meant the rear frame opening.
I really would want to put the new Shimano Nexus 8 speed hub with coaster brake on my Humu. I will try to call Shimano and see what they have to say about the install.