[big gear head]

Looks like someone has been doing a lot of one wheel burnouts. This is very destructive to a differential. Changing the gears and washers is not difficult, but from the looks of it I would say that the inside of the differential case is also worn and the whole unit should be replaced. The thrust washers behind the axle gears are probably shot too. If it was mine I'd upgrade to a Eaton Posi so there are no more one wheel burnouts.