[Ironangel]

That's to much backlash, move the ring gear closer to the pinion. The transfer case is probably due for a rebuild as well. Backlash should be in the .006" -.012" range. If that pinion moves for and aft at all, it's due for a rebuild. All that free play beats everything from the differential to the flywheel to death. I'd start with the rear axle, new axle bearings and seals, if the pinion has any end play, sometimes tightening the pinion nut a bit will eliminate the free play. Move the carrier toward the pinion by removing shims from the right side carrier bearing shim pack and placing them in the left side shim pack. I'd start with .020" and check the backlash. Factory 12's (some) had one piece cast iron shims that were ground to fit, they were right at .250" thick and work great if you can keep from breaking them. The "Super Shims" from Randy's Ring & Pinion are the bees knees as they wont damage removing and installing them. Good luck!