Re: Rear Dana 60 pinion bearing issue
My van has a Dana 60 full floating rear axle (dual wheel bearings). Now that we've got it apart and fully inspected, it looks like a shim between the two pinion bearings sheared and sent metal bits everywhere via the fluid. This caused the inner bearing to fail and allow the driveshaft/pinion to move inside the housing. At least the wheel bearings and LS unit are still in good shape.
The recommendation given here on replacing the axle with a Dana 70 unit is good advice, as a Dana 70 has a larger pinion bearing which is helpful given extra torque of a chipped 7.3PSD. In my case, I've got enough time and $$ into pulling this one apart, that the cost of replacing the pinion and ring gears is far lower than buying and installing a D#70.
We suspect heat and broken down gear lube were the primary contributors to the early failure in my D#60. With the addition of the Mag Hytec cover, the additional fluid it holds, proper break-in period and Amsoil post break-in fluids should keep this problem from recurring.
For those who think their rear-end is in trouble - definitely consider the Dana 70 as a potential solution before you get too far into it.