As the title says the inner cuff of where the axles plug into the diff is chewed up big time. I'm not sure if the part is replaceable or if its attached to the diff itself. Either way im sure this is not good and hope it doesnt blow out my bell housing. should i replace the diff or is there a simpler cheaper part I can replace?

 

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I would replace it as soon as possible and make sure you keep your trans full of fluid the same thing happened to my b18a1 hope this helps

 

A picture is worth a 1000 words. I believe I know what you are describing but I'm not positive. Are you saying that the splines in the trans that the splines on the axle line up with are chewed to hell? If so, that is indeed your diff. Replace with another diff.