I just put new wheel bearings and seals in the rotors and rebuilt the stock 4x4 lockouts last weekend. I walked out in the shed this evening and have found a huge puddle of oil under the truck. I was scared to death it was from the newly installed 351M. After furthe investigating I have found that it is differential oil from the vent tube. I filled it after I replaced these things. So can any one tell me what has caused this to leak out.

 

You packed the bearings only and you added fluid? The inner seals hold fluid in, and the axle tubes are dry. This means that the bearings require grease only. So if you added fluid, you did not need to. Your front level is too high and it is coming out.

Now lets see how you actually got the level so high, and lets wonder why any heat is being built up in the front end. I ask this because they are difficult to overfill, and if the hubs are unlocked it ould be very difficult to generate any heat in the front end that was not turning.

Did you verify that you installed the lockouts correctly? Might actually be locked in.
Have you determined that heat being generated is not from the bearings being too tight?
What method did you use to get fluid into the front diff?
Usually the fill plug spills oil far before it is overfilled.

 

I put new wheel bearing (inners and outers) and seals. I checked to see if the lockouts worked by climbing railroad ties. Took her for a spin and parked it. After work tonight I went to go for a country cruise and noticed a huge amount of oil under her. Oh I filled the front with 80-90 till the it came out the hole. Actually you know what it might still be locked in after my drive last night I better go check.

 

Wheel bearing inners and outers will still not strike any oil. You can take the entire spindle off, and unless you remove the axle out of the tube you still wont get oil.

Depending on which front hubs you have, it is possible that the hubs can stay engeged. Might not be likely to get both installed incorrectly, but very possible.
Heres why:
Many require a ramp on the dial to engage the hub, by pushing the outer coller in, thus engaging the hubs. If the ramp is not oriented correctly, it wont release the hub itself, and it will remain locked, even if you turn the dial to free.
I have done this a few times, and scratched ny head after the dial felt funny and did not work.
Verify that the hubs not only lock, but unlock as well.
Your verification with the railroad ties supports my theory.
Its just a guess, but I still feel as though the front end has too much oil in it, and that the hubs may be engaged.
Do you have a slanted driveway, or did you fill the diff while the truck was still in the air?
This will artificially raise the fill hole higher than the center line of the axle, and permit you to overfill.
I over fill my D60's on purpose and this is how I do it.

 

It wasn't locked in I guess I better back the axlenuts off.

 

Ok I am gonna explain my hubs in my terms, probably not the right ones but anyway. From the inner out I have a axlenut, a washer with holes in it that will mate up to the stud on that first axlenut. Another axlenut, then a spring going to a gear with hozizonatal teeth that will mate to another gear. Then I have a piece with two ears on it that the lockout will ramp up too. I installed this with the housing and red plastic piece in the free position. On the highest part of the plstic piece I pushed it in to make the ears have pressure against the spring. Of course I also reinstall both locking rings (axle and hub housing)

 

Just another possibility. If you have driven through deep water, you might have sucked water into the housing. When the hot housing hits cold water the warm air inside contracts and creates a vacuum. If the vent tube is submerged when this happens it will suck water in through the vent tube. Since water floats on oil, if you get enough water in there it will float the oil right out the vent. I've seen it happen.