Thanks for the advice. Thanks also for your patience if this is a rudimentary question as this is the first time I have serviced a ball diff since I was 13 and had my first RC10 in the 80's.
The thrust bearing looks intact and I examined all bearings. Nothing was binding. I put the gear box back together and locked the diff. I then locked the outdrives with allen wrenches. I was not able to rotate the spur gear. I then repeated the same exercise after I loosened the diffs 1 full turn. I was able to easily rotate the spur with the diff outdrives locked. It seemed too easy. This leads me to believe that there is some kind of wear in the diff gear.
I am sorry to be persistent, but the frustrating part in all of this is that I don't know what a worn diff looks like and how well the diff balls *should* seat in the diff gear.
I'd like to be crystal clear before I have to order the parts from Hong Kong, wait 2 weeks, and find out that the new diff gear did not solve the problem.