sideways wrote:
Your diagnosis of the problem doesn't make sense to me.
Fair enough, here's how I determined it was the diff (all tests done in 2WD):
1. (Background) I've engine swapped it and I made the connection between the tranny and the transfer case solid (took the flanges that go on the new tranny, and transfer case to a machine shop and had them friction weld it together)... So there is 100% no "wiggle room" between the tranny and transfer case.
2. I replaced the both U-joints on the rear driveshaft thinking that was the issue and problem persisted.
3. Decided "It must the transfer case or tranny shifting (twisting) when I go between gears" so I tested that by pulling the handbrake (stopping the rear drum on the transfer case from moving) and shifted between gears... There was no jerk or twist.
4. I then decided to unbolt the driveshaft from the transfer case alone and remove that half-shaft and then rotate the other half-shaft (on the diff)... And guess what? The darn thing has almost 90° of free rotation (I can rotate quarter turn before the gears hit each other).
Hope that was a good enough test for you

(I am also on my way to attempt your version as I didn't check for "rock", only rotation.
What I am yet to determine is why when I put it in drive and the diff jerks, the whole body feels like it twists forward and to the driver side, then settles when I put it in neutral or drive off.