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You have to measure backlash at the gear teeth wittouth tires and preferably without the axle shafts in there either or driveshaft. It also must be measured with a dial indicator.
Maybe we are talking about different things here. What I am talking about is the amount of distance the driveshaft moves before the axles engage. I have the tranny in neutral and truck on the ground. I know 9" was about 1/2" was good but not as sure about 8.8 it is my first 8.8 hav had alot of 9".
True back lash is set to around .008 not a 1/2 inch. What you are more than likely seeing is the amount of slop you have from turning the drive shaft until the axle engages. You can not checking for back lash like you are and get a true reading. If you have an open carrier you should see more play than you would from a trac loc.
I realize it is inacurate but just trying to get a feel for how worn it is without pulling it apart. If it is going bad I wanted to start a search for a new one to have on hand for a quick swap. If it was a 9 I would not worry just a hour to swap the chunk and on your way.
You can't really tell what kind of condition the axle is in by playing with the companion flange. If there is barely any pinion preload that means it was either setup wrong (if it was recently worked on) or the bearings are worn. But, the only way to really tell is to actually work on it. Measure the pinion pre-load, and then take the cover off and take the carrier out and check the bearing surfaces and race surfaces. Check the backlash and run a pattern on the gear teeth and see what it comes out like. That'll give you an idea.
if it helps, I just did the same thing you are discribing on my 8.8 rear axle and there was very little play (maybe 1/16") before the axles started to move.