There are two pins in the pinion shaft that hold it in place. On a stock differential failure one of the pins shear in half and allow the pinion shaft to walk outwards and eventually fail (usually due to snapping). The pinion shaft in our Gen 3 LSD is much stronger and is much harder to snap.
In Bill'* case when the pin sheared and allowed the pinion shaft to walk a little instead of the pinion shaft breaking it pushed one of the bearing races outward which made contact with inside of the differentail housing cover and caused it to scrape which was what all the shavings in the pan were. Eventually without the race this caused excessive play in the pinion shaft which caused the roller bearing to fail. The pins in the pan are from the roller bearing the pinion shaft sits on.
It is regrettable that this happened and there isnt much we can do about the two pin design GM uses. We covered it under warranty and even moved a few scheduled cars around to get Bill'* tranny to him in time for this weekend.
Everyone attending NEBF should buy him a drink for the month (or 2?) he has been having