[Barry-ct]

More than likely your pinion bearings are bad and the source of your noise. If you have that kind of up and down movement, fluid is probably pouring out quickly. It was run dry, then run some more and wiped out the bearings, Who knows what other damage has occurred. Take the drive shaft off the rear and remove the pinion flange off and see what the outer bearing looks like. Once the flange is off, you should be able to slide out that bearing. Be careful in case there is any shims. It been a long time since I messed with these rears, so there might be shims on one side or the other of the bearing. Napa can get the pinion seal if you repair what you have. Bearing also. Probably easier just to find a rear and swap it out.