To answer Scott's question. No, it wasn't nearly this noisy initially.
Generally in my experience if the issue were with the clutch pack being too tight or wrong lube , or a combination of, including the fact that the clutches & plates might be new and fuzzy, the complaint would be most notable when newly assembled and degrade with use (though the exception being in application of the friction modifier directly to the plates at assembly and then the wrong lube utilized on the fill). The solution recommended by Ford in the day when experiencing a Trac-loc that was overly effective causing excessive noise and/or suspension or steering lurching or excessive tire drag was to find a parking lot and execute tight figure eights for ten minutes to "wear-in" (wear-out!
) the friction plates.
Now I have seen instances where excessive 'one-wheel-peel' or 'off-road' experiences have damaged the plates by warping, folding, welding and even breaking them, all this causing them to bind in attempted intentional slip, and make noise. And as Randy said, breaking of the Trac-Loc case wouldn't be anything new; and the cover can be broken in the typical fashion and remain engaged adequately to function for a period (as long as only grandma is driving!
), but once separated thoroughly generally one will note ring & pinion howling as it's proper relationship will be lost, and with greater loads or if it's the cone side, all rolls to a stop pretty quickly, with a really bad noise.
It is your observation of the noise only in turning that would lead one to suspect, at least at first, only those items that are put into motion at that time, whereas most other items in the differential already in motion in the straight line functioning don't really react consequently greatly because of the turning event.
Probably as stated previously, removal and inspection is the best course of action, particularly before something really does go wrong and damages your SPEC case,.........that'll cost ya!
Scott.