Did you lube the bushing before installation? It sounds like friction is keeping it from seating. The paint would have to be very thick to cause 1/4" clearance issue.

Yes, I used the slyd-glide product both in the bushing cavity as well as the bushing. Using a 4 1/2 PVC pipe coupler which fits the bushing edges perfectly. 5/8 althread rod with a board on top of the coupler so as to apply even pressure, while pulling down into the bushing cavity.

Ok, it's been awhile but I'm finally able to work on getting the rear end installed back into this car. Since this car has been drying out a figured it's time to address a few body issues. I'll do a separate write up on this in the body section, but here I've got a general question, ie before I go screwing something up.
In the below pic there is rust damage showing above this exterior body panel. I can address the rust, which will be in the other thread, but what is the best way to remove these panels ? Do they pop out like those on the 123's with one of those plastic body tools from HF ? Once popped off for repair will the fastener need to be replaced also.

Side cladding data
 

W126 exterior door cladding

(173)
GARNISH MOULDING RIGHT
MB# 1266980880

(173)
GARNISH MOULDING LEFT
MB# 1266980780

(167)
PANELLING RIGHT BOTTOM REAR FENDER
MB# 12669028407174

(167)
PANELLING REAR FENDER LEFT BOTTOM
MB# 12669027407174

(124)
FASTENER BUTTON PANELLING TO REAR DOOR PLANKING x6
MB# 1269880181

(110)
GARNISH MOULDING RIGHT
MB# 1266980680

(110)
GARNISH MOULDING LEFT
MB# 1266980580

(104)
PANELLING REAR DOOR RIGHT BOTTOM
MB# 12669026407174

(104)
PANELLING REAR DOOR LEFT BOTTOM
MB# 12669025407174

(101)
EDGING PANELLING TO FRONT DOOR PLANKING x2
MB# 1266980358

(95)
EDGING PANELLING TO FRONT DOOR PLANKING x2
MB# 1266980558

(92)
EDGING PANELLING TO FRONT DOOR PLANKING x4
MB# 1266980058

(89)
NUT
MB# 1239901750 x4

(86)
FASTENER BUTTON PANELLING TO FRONT DOOR PLANKING x16
MB# 0019887681

(71)
CLIP PANELLING TO FRONT DOOR PLANKING x4
MB# 1269885078

(50)
SCREW PANELLING TO FRONT DOOR PLANKING x2
MB# 1269900033

(47)
CLIP PANELLING TO FRONT DOOR PLANKING x4
MB# 1269880278

(44)
GARNISH MOULDING RIGHT
MB# 1266980480

(44)
GARNISH MOULDING LEFT
MB# 1266980380

(35)
EDGING PANELLING TO FRONT FENDER x8
MB# 1266980158

(32)
FASTENER BUTTON PANELLING TO FRONT FENDER x26
MB# 0019883481

(30)
FASTENER BUTTON PANELLING TO FRONT FENDER x2
MB# 1269880581

(26)
CLIP UPPER PART x20
MB# 0059889778

(17)
CLIP PANELLING TO FRONT FENDER x8
MB# 1269880378

(11)
GARNISH MOULDING RIGHT
MB# 1266980280

(11)
GARNISH MOULDING LEFT
MB# 1266980180

(38)
PANELLING FRONT DOOR RIGHT BOTTOM
MB# 12669024407174

(38)
PANELLING FRONT DOOR LEFT BOTTOM
MB# 12669023407174

(5)
PANELLING RIGHT BOTTOM FRONT FENDER
MB# 12669022407174

(5)
PANELLING FRONT FENDER LEFT BOTTOM
MB# 12669021407174
.
.
http://i21.photobucket.com/albums/b2...pspuy9pmvq.jpg
.

Ok, it has been awhile since I've been able to work on this project. Currently I have the differential mounted to the subframe and the axles are repaired and installed. Can someone supply me the torque spec's for the differential to the subframe and rear differential cover bolt spec's.

Thanks
Greg

Greg,
Looks like you've been working on this for a while!
It took me two months to do my rear end and I thought
that was a long time.

The diff mount to the back of the differential is 120Nm
The diff mount to the subframe is 30Nm
The back cover of the diff goes on at 45Nm.

Jeff