Well the diff is ready to go back in. I did some work very early this morning before heading to the office. Got the carrier caps torqued and also removed the axles so I can get the diff out this evening and do the swap.
So others won't make the same mistakes I did.
1. The 2.170" spacer I had would have worked as is (with a couple of spacers). I goofed when I torqued down the pinion flange the first time (I guess worried I was over torquing) and guess I had not pulled things together. And still had slop and thought I was firm against the spacer. Thinking the spacer was too long I turned down the spacer, then ended up adding shims making it longer than 2.170". Felt stupid, but it was a lesson.
2. Then later I over torqued things, not paying attention to how tight I was getting the bearings. The inner bearing looked fine, but I didn't feel good about the outer bearing, so bought another new one. Might not have needed to, but don't want to take any chances. So lesson here is torque things down very slowly, in stages, constantly stopping to check if the pinion flange still turns freely.
3. Not a mistake, but a note. Checking the pre-load: I used a beam type inch pound torque wrench. The inch pound reading should be while you are constantly turning the pinion flange. You will get a higher reading until the flange overcomes the force needed to start the flange moving, then the reading will settle out to a lower number as you turn the flange. Make sure to get the pinion pre-load set correct and record that number. Then when you are doing the carrier pre-load you are just making the inch pound reading while turning the pinion about 4 inch pounds higher once you are also turning the ring gear. My pre-load when all done is around 20 to 21 inch pounds turning the flange.