Analysis of Leakage

Clean up the leaking area enough to identify the exact source.
A plugged axle housing vent can cause excessive pinion seal lip wear due to internal pressure buildup.
Make sure axle lubricant level for both nodular iron and aluminum housings is 3 - 5 mm (1/8 - 3/16 inch) below the bottom of the fill hole.

Axle Vent

Note: If the vent cannot be cleared, install a new vent.

A plugged vent will cause excessive seal lip wear due to internal pressure buildup. If a leak occurs, check the vent. Make sure the vent hose is not kinked. Remove the hose from the vent nipple and clear the hose of any foreign material. While the hose is removed, pass a length of mechanics wire or a small diameter Allen wrench in and out of the vent to clean it. Connect the hose when done.

Flange Yoke Seal
Leaks at the axle drive pinion seal originate for the following reasons:
- Damaged seal.
- Worn seal journal surface.

Any damage to the seal bore (dings, dents, gouges, or other imperfections) will distort the seal casing and allow leakage past the outer edge of the axle drive pinion seal.
The axle drive pinion seal can be torn, cut, or gouged if it is not installed carefully. The spring that holds the axle drive pinion seal against the pinion flange may be knocked out and allow leakage past the lip.
A new pinion flange must be installed if any of these conditions exist.
Metal chips trapped at the sealing lip can cause oil leaks. These can cause a wear groove on the pinion flange and pinion seal wear.
When a seal leak occurs, install a new seal and check the vent and the vent hose to make sure they are clean and free of foreign material.

Drive Pinion Nut

CAUTION: Be sure to follow the correct procedure for setting the bearing preload when the nut is installed.

On some high-mileage units, oil may leak past the threads of the pinion nut. This condition can be corrected by installing a new nut and applying
Threadlock and Sealer EOAZ-19554-AA or equivalent meeting Ford specification WSK-M2G351-A5 on the threads and nut face.

Differential Seals
Stub shaft pilot bearing housing seals are susceptible to the same kinds of damage as axle drive pinion seals if incorrectly installed. The seal bore must be clean and the lip handled carefully to avoid cutting or tearing it. The seal journal surface must be free of nicks, gouges, and rough surface texture.