I saw your question yesterday, I see no one has responded yet so I'll try to get you in the right direction. I'm honestly a bit lost in your code (not your fault) so I can't provide you with an exact solution, but I know where your problem is, the origin.

Every 3D object has an origin point in 3D space. That origin point is completely free from the object in space (it could be anywhere, depending on how it was made). This point however determines how certain changes get oriented, especially stuff like rotation. The object will rotate around this point. If you then look at your first and second screenshot again, you see where your origin point is, it is at the top right corner of your original wooden block. That's why if you turn it towards that top side (second screenshot), it will leave a space, and when you rotate it down, it will rotate 'into' itself.

Again, I'm just not experienced enough to determine how this is set in your code or how to fix it, but I hope you can do something with this.