So newbie question here, have played two games from the starter set with my buddie and we ran into a bit of a dispute with his first attempt to engage.

His tray stopped movement less than a fingers width away from my tray and he tried to square it up, I argued that to be engaged the trays need to touch so what do you guys use as allowance for engagement distance? Would you say it has to be clear contact?

Also does anyone have any tip for using the movement guides when you have a lot of units at close range like next to each other so for example a curve guide sits on top of another tray but if you move the tray that's moving moving it would just miss the tray, would you say that's engagement or is there an easier way to use the guides so proximity to other trays is less of an issue?

To the first question, the rules are quite clear on the distance at which units are considered to be engaged. Per Rules Reference page 11 item# 34: "Engagement If any part of a unit’s trays are touching any part of an enemy unit’s trays, those units are engaged." There are additional good tidbits in there, but to put it shortly, if your unit is not touching the enemy unit, the units are not engaged.

For getting good movements, years of X-Wing have taught me the value of marking the corner of a unit and moving it out of the way to allow room for the template. If the units are likely to collide, you can mark the edge they are likely to collide against with an appropriately sized strait template (each strait move is the same length as a tray, so the 2 strait can nearly perfectly mark the edge of a 2 tray wide unit). Then, place the template for the unit that is moving on top of the marker template (have your opponent help hold the marker template so it doesn't move) and align it to your moving unit's tray appropriately. you can mark the collision spot with a finger or other pointy bit, and toss on the range ruler to find the appropriate angle of the unit if need be. Then replace the moved unit, remove the templates, and move the unit to the appropriate spot, and commence with closing in and aligning. It sounds complex when it's all typed out, but in practice it's quite easy and precise, given careful hand movements.
If the moving unit is not going to collide, but there is simply a unit occupying the same space that the template needs to, it's even more simple: mark a corner on the interfering unit that will not get in the way of the template, using the deployment area marker works well, or again a strait movement template. slide the interfering unit out of the way, move the moving unit, and replace the interfering unit.

Again, the marking of units sounds complex, but with a bit of forethought, some steadily applied fingers, and the assistance of your opponent, it is quick, and yields better results for both parties than guesswork.

In my opinion, marking units is too fiddly in this game with how many trays some of the units get. Just hold the movement template over the offending units and eyeball where you would land. More often than not, it's close enough. This is one reason I'm a little hesitant about basing trays: they are a great flat area to rest maneuver templates on in this situation.