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Just a thought, but you mentioned that you greased again after installing the bearings.....AHHHHHHHH!!!!!! bearing grease, axel grease etc. Any type of lube like that on the hubs could cause them to not work properly. The only place you need to grease near the hub is the bearings. Now a little grease on the hubs is not a prob, but not as the primary lube. clean the hubs with brake cleaner, then soak in tranny fluid for about an hour, or spray down with white lithium grease. I use the lithium jsut cause its easier. There have been alot of ppl with issues of the hubs not disengaging because of too much grease around them. Make sure to wipe the excess off the end of the axel and spray that down too.
billybob, the reason the hub wasn't disengaging is that the rear of the housing was all torn up. This allowed the return (read: disengaging) spring to pop out. I only greased the bearings and the spindle. the only grease in the hubs is what is sealed inside, and it came that way out of the box :-).
DW, I think you're right about this fixing the steering problem. I don't know if it was b/c the hub wasn't disengaging or if it was b/c of all the play in the rotor, but both of those issues are resolved and I'm not noticing my steering problem anymore. I haven't had the chance to try a few figure-eights to test it fully, but I think it's ok.
Thanks again for all your help guys. I'm back on the road, and if we'd ever get some rain, I'll be back in the mud