Ken, I am thinking worst case scenario here, but where could I find a good used rear end?

From other little tests I have done, I really think it is the differential.

I have had the car on a lift and rotated the tires and am quite sure that there are a couple of inches difference between when the tires move and the drive shaft moves.

Not sure exactly how much, but the clunk it makes when I do this sounds a lot like the noise made when operating, although a lot less noiser.

Additionally, I have been to my indy's shop and did the same test on another 126 and there was little or no play at all.

Thanks

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