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Not thrilled at the prospect of having to grind my housing, but better than having an incompatible diff.
Sound like you've got an ARB diff. I think what you are running into is probably normal with the parts being used. You can see in this pic where I had to do some grinding on my housing to get a Marlin built high pinion ARB diff to fit. A little for the adjusting nut/seal housing and a little for the ring gear. There was a fair bit of test fitting. Also, make sure your copper line isn't contacting anything inside the housing.
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