8 3/4 axle end play question ??

Amen & Alleluia !! Success!! axle end play problem solved:) heres the backtrack steps I took tonight.

1. Double checked both inner axle seals, I was able to tap them in just a slight amount more... until I had a firm and dead stop.
2 Packed new wheel bearings with good grease,and lightly greased bearing race surface
3. Inserted drivers side axle until flush,then tapped with a rubber mallet to firmly seat bearing.
4. Tightened all retainer nuts to 35 ft.lbs.
5. Next, Passenger side axle assy-packed wheel bearing and lightly greased bearing race surface.
6. Per FSM,- Fully open the adjuster(Counter Clockwise).
7. Insert axle into housing until flush,then tapp with rubber mallet to seat bearing.
8. Tightened all retainer nuts to 35 ft lbs.
9. Turn adjuster cog,(Clockwise) Fully seat until there was no end play on both axles.
10. Backed off adjuster cog (CounterClockwise) until end play could be felt without a dial indicator.
11. Checked with dial indicator.- Final readings after adjusting cog forward and backward (Clockwise & Counterclockwise) was about 010.
12. Remove one retainer nut and install the cog wheel lock tab. Retorque to 35 ft lbs.
13. Rechecked with dial indicator. About .012 end play.
14. Checked driver side axle end play and its perfect!!.Lol...No 1/8" end play now!!
15. I did remove the 1/8" spacer on the pass side axle prior to having purchased brand new tapered bearings, axle adjuster assembly,and seals installed.Contacted previous owner and he too had no history on why there was a spacer installed at some point on these Dutchman axles. And for future reference these Dutchman axles are 28" in length for both sides.

Here's some food for thought,... if you ever buy aftermarket axles, purchase the access hole option like mopar had on their OEM axles. Trying to torque down retainer nuts with no access hole is a big PITA.

Rootcause's:
It looks like I had a multitude of worn parts here. Thankfully the axles fully seated in the new JEG's clutch style posi I purchased along with Gear Motive 3:73 gears.
Looking forward to the test drive and other future upgrades going forward.
Thanks to everyone who commented on this crazy issue over the last two weeks.!!
HotRod20