Rear end location wrong? IM STUMPED!!!

That's factory tolerance.
But, here's a hint.
>If you have an 8.75 rear end, then the axle end-play adjuster is supposed to be, on the passenger side. Have a look. Maybe yours is on the driver's side. The adjuster can be as much 3/8ths off-set, which is doubled when moved from side to side.I moved mine to the other side, which got it nearly centered.
>Also, pop the wheels off and measure the exct backspace of each, maybe you can get some change there. On my 10" Rally wheels, I had to cut the spider out of one of them, and move it over a hair, to get the sidewall off the fender lip.
>And finally, if the quarters on your car, are not original, some guys will just install the new patch-panel, OVER the old one, and there it is, lol.

Altho your story is somewhat unique.
All true and good advice. I ended up with the same problem after replacing an entire quarter panel, but only had about a 3/8 difference. Try taking a close look at your 1/16 side to see if it's been replaced or patched. If I ever do that again, I'll fit the new quarter with the new wheel/tire on. Also, the width of the lip on a repop can be wider than OE. If your thrust angle is OK, I would just cut a little bit off the 1/16 side to get better sidewall clearance. Nobody can see both sides at once.