It could be the diff gear being the wrong way round as above, but if you can not find a good setting then it is the cone washers, it us very easy to over tighten the the diff which squashes the washers flat so they no longer work as a spring.
I have asked Schumacher to sell the washers separately as buying them in a kit is expensive as the other washer spacers do not ware, I have in the past re formed them using a tool for removing the ball from a plastic ball joint made by FG.
It is a neat compact design of diff but using a proper compression spring would have made life easier.
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