Differential case inspection /evaluation, opinions wanted

long time lurker first time poster
I finally got the gumption to rebuild the rear axle on my 06 KJ Liberty 196,000 miles, 60k are mine.
First, I've never done an axle rebuild, but I can read, and plenty of YouTube videos exist. I've got most of the tools I need, so I thought I would give it a go.
The pinion and ring seem to be in excellent condition. I'm not worried about those.
The bearings were certainly worn, and some were showing pitting (likely the source of my noise).
All seemed to be going as planned until I was cleaning up the surfaces when I noticed some burrs and bulging as I ran my rag and fingers over where the races sit for the outer pinion bearing. Upon closer look, segments are missing. It is certainly possible I boogered them up but the fractures were dirty not fresh, I didn't see any fragments in the case. Furthermore, I didn't use a punch; I used a big socket that matched the race diameter, and I didn't have to give it too much oomph; the race came out quite easily, in hindsight, too easily.
I think someone has been into this rear end before. The ring and pinion, as I said, are very crisp. Some markings appear to say "+093 NK or WK." Is that something seen from the factory or a repair? There was orange RTV under the pinion seal, but that is not the factory method, I don't think. Also, there was orange RTV under the cover, but I didn't think too much of that as I figured the oil had been changed at least once.
The burrs can be taken down; the fractures are only partial. The bulging is what concerns me the most; I don't think the race will seat squarely, and consequently, the bearing won't sit right and wear prematurely, which is what I believe happened here before; I could try and grind at it with the Dremel, but I don't think there is any way I could be sure it was square after I was done either. You can't see the bulging in the picture. It's more felt, but imagine someone driving a punch from the other way and pushing material into the seat.
Do I need to go to the salvage yard for a donor axle? What do you look for in a salvage yard axle? Can I use the case I have?
Thoughts?
Also, what do you all think of these side and spider gears? They make no noise when turning, do not have pitting, have asymmetrical wear, etc., other than not looking as crisp as the ring and pinion. Are they still serviceable?
TIA

Looks like someone beat the hell out of the bearing seat instead of drifting the bearing out, sadly if the seat is shot setting pinion preload is going to be impossible, getting it re machined will probably be more expensive than a replacement axle.
If you buy one get it from the same model as yours, diesels, manuals and 2.4s all have different ratios.
If yours has the speed sensor in the pumpkin you need an earlier axle, if you have 2 x speed sensors at each end you need a later one.
If you get a chance pull the cover off your replacement and check the condition of the oil and the gears, oil that looks like mud = rust inside the axles tubes, worn gears and bearings and a nightmare to clean out. Also check for any oil leaks at the input and output seals. If you get lucky some of the axles were equipped with an LSD from new.
Keep your old half shafts if the bearing faces are good, replacements are expensive.

Most KJs have the factory track-lok around here.

I highly recommend a crush-sleeve eliminator for any rebuild - especially if not experienced with this. Much more forgiving for trial and error.

Have you considered getting a professional opinion? Might be worth it.

KJowner said:

Looks like someone beat the hell out of the bearing seat instead of drifting the bearing out, sadly if the seat is shot setting pinion preload is going to be impossible, getting it re machined will probably be more expensive than a replacement axle.
If you buy one get it from the same model as yours, diesels, manuals and 2.4s all have different ratios.
If yours has the speed sensor in the pumpkin you need an earlier axle, if you have 2 x speed sensors at each end you need a later one.
If you get a chance pull the cover off your replacement and check the condition of the oil and the gears, oil that looks like mud = rust inside the axles tubes, worn gears and bearings and a nightmare to clean out. Also check for any oil leaks at the input and output seals. If you get lucky some of the axles were equipped with an LSD from new.
Keep your old half shafts if the bearing faces are good, replacements are expensive.

Click to expand...

Thanks for the salvage yard tips. I was pretty sure it was toast, but I was looking for a second opinion. I think I will call off work tomorrow to make the adventure.