I pulled the rear axle plug lots of metal shavings. Removed the pan and I can see marks of the pinion gear touching the carrier. How does that happen?

 

So we are on the same page, the pinion gear is held in place by the nut against the flange that is bolted to the tail end of the driveshaft.
Usually , the nut tightened against the flange contacts a crush sleeve that is sufficient to maintain the set torque holding the assembly together. The first indication of something going haywire is the pinion seal starts to leak differential lube. The scenerio goes something like this, seal leaks, lube level gets low, bearings wear and get hot , then loose. Without actually looking at the parts, that could be what happened. You should certainly have heard some disturbing growling noises when this was happening. Does it sound familiar ?

 

I have not owned or driving the truck much since buying it. The previous owner did some driving off road. No telling how hard he pushed the truck. There were no noises that I noticed/heard. The oil appears to be free of metal or water and smells just like regular old rear oil. And the ring gear looks fine. I am not very much of mechanic and have some bad discs in my spine. But I am going to try and drop the drive line also to check for movement of the pinion. One shop gave me a quote of $1000 to $3500 dollars to repair without looking at it worst case scenario.

 

If possible you might check with a few salvage yards for a good used differential and the cost would be much lower.