My crankset stops the pedals from turning when I tighten it onto the bottom bracket
There is no BB Spacer for a square taper crankset (and is a very bad idea to start). 
From the image, it looks like you have an (square) ISO crank on an JIS (low profile) spindle. I can see the outer square of the crank was severely deformed.

There is not much you can do but to start thinking of changing the crankset, or keep holding on to it til the day it depart.



Edit:

Sorry, I missed your question. But before answering, can I ask you to check:


If the crankset touches the BB? 
If it is a dead-lock or a severe friction on the spinning of your crankset? 
If it makes noise when you try to spin the crankset on the BB?