ORIGINAL: The Real Dogman

Yes thats it, and if the factory did not get the screw lined up with the flat spot on the input shaft it will seem tight(with locktite holding it). Take it apart and see if the screw has been rubbing on the input shaft. But when you put it back together again be sure the set screw is lined up with the flat spot on the input shaft...

And to test before you take it apart hold both front tires with your feet(truck upsid down so you can see the drive shaft) Now grab both rear tires and rotate them together. You should be able to rotate the rear tires(with a little force) while the front tires are still. If you can look at the drive shaft to see if it is rotating too. If it is then the center diff is the problem(which I highly doubt) but if the drive shaft is NOT rotating then the rear diff slpping somehow, whether its the grub/set screw loose or the internals of the diff are knackered(as the English might say)

Hope this helps