Update... I did manage to get it to compressed enough with brute force and started tightening up the screw with the T-nut. How close do the ears on the T-nut get before it should be tight?
I was tightening it up and every so often turning the diff outdrives with a hex driver in each end - I could still turn them so kept tightening the screw... and then it snapped so I guess I was tightening it too much
