Any reason not to do this?

VonCramp said
Anyways, the guy who originally built the third member cut the axle off by 7/16" or so. His words. I am thinking well I've already gotten everything apart. Why not just narrow other axle and housing too? I of course realize this moves everything closer to the springs. Aside from that any thoughts of why this is a bad idea.

This rear end was in the car and running fine before you had things messed with so why would you have to cut things to put it back together if all the correct parts were used?

I think you need to find someone that knows how to fix your problem without screwing anything up even worse.