[Synchro909]

I've had to redo a number of diffs all because someone set the preload too high. It is very common but can be easily avoided IF the directions are followed and not rushed. To do the adjusting, I made up two special spanners out of 3mm (1/8 inch) thick steel. They are NOT pretty, in fact, I refer to them as my fugly spanners. They are thin enough to be able to get both on a nut each and still be able to swing them, yet thick enough to be able to lock up the nuts well. When setting the preload, be prepared to spend some time doing and redoing it. As has been mentioned, the preload changes when the lock nut is done up. I believe that is because VERY LITTLE longitudinal movement is need to significantly change the preload and the small amount of slop in a thread (in the first nut) is enough to change the preload when the second one is tightened against it. The adjusting nut goes from having the bearing pushing it in one direction to the lock nut pushing it in the other. Looseness in the thread will allow it to move slightly as the lock nut is done up.
In this case, I agree fully with those saying the preload was set too tight and this is the result. I'd find a new diff centre.