I lowered the diff and tried that too and also doing one side at a time. No luck
The missing space seems to be about the thickness of the spacer that came off the old axle and which I put on the new one.
This is a real pisser.

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1981 240D 143k 4 spd manual -SOLD

2004 VW Jetta TDI 5 speed 300k -still driven daily