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Guys - Replacement of the bearings is not necessary at all. From my research before having an LSD installed in mine, all information indicated that the bearings do not require replacement. Fortunately my LSD supplier included axle seals, the only thing advisable to use new.
It is critical that your installer knows how to set the correct backlash tolerance, which is most likely Scotty's problem. Detailed installation instructions downloadable from Birds UK (for Quaife that probably applies to all LSDs in our cars) says (quoted):
Crown-wheel tangential clearance (drive pinion backlash) should be checked with a dial gauge according to BMW procedure. It should not be necessary to adjust with shims. BMW tolerance for a new differential Backlash 0.06 mm to 0.14 mm. (0.0024 to 0.0055 in.).
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