C-clip come off inside the diff?

Met up with a guy here in Austin a few weeks ago that had this problem. Axle was nearly 1" out of the diff and no longer in the splines.

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'95 E320 Wagon
'85 300TD "Puff The Magic Wagon" - SOLD
'19 Mazda CX-9 Signature - Wife's sled
'21 Morgan 3-Wheeler P101 Edition - SOLD
'95 E300d - SOLD
'84 300TD "Brown Betty" - Miss this one
'81 240D "China Baby" - Farm grocery getter