you really only need to replace the gear, and i never go by the factory settings. i just adjust it tight enough that it doesnt slip but it is still loose enough that you dont break anything. it just takes some tinkering to get right. oh, and heres a link to some really good diff grease and some good tranny grease. (it says for cvd's etc. but i still use it in the tranny and it works well)
http://www2.towerhobbies.com/cgi-bin...?&I=LX0278&P=0
http://www2.towerhobbies.com/cgi-bin...?&I=LXM774&P=0