pinion/spur can cause screeching sure - the slipper wouldn't really make a noise like that but the diffs sure might (rear one in particular) so make absolutely sure the diff isn't slipping. Some people test that by holding the drivetrain and one wheel - then spinning the other. I prefer to hold the car on my lap whilst spinning the spur with my thumb to see what slips first.
I didn't use any CVD's on my Durga, so no it's not absolutely needed - at the front it might be a good idea and will certainly cut down on the horrific noise when turning - but like I said it's OK without as long as you use the provided foam spacers.
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