When I put the back cover on my diff I used a light coating of permatex copper (orange stuff). This worked well for me, I switch to the copper and seems to work very well.

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-Randy Wakefield

1969 220D 4 speed (parts car)
1976 280C
1976 280S
1981 240D 4 speed (parts car)
1982 300D
1983 300TD (Ivory)
1983 300TD (gold)
1985 300TD (gray)
1987 190D 2.5
1970 280SEL (sold)
1977 240D 4 speed (sold)
1974 280 (rusted to death)
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1927 Chevy 4 door sedan
1938 Chevy 2 door sedan
1950 Willys Jeepster
1955 Studebaker President 4 door
1977 Ford F250
1979 Glastron 17'
1948 John Deere A
1960 John Deere 2010
1979 Satoh S650G
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2000 Bichon (Doby)

I guess if you have to stock only one silicone sealant, the copper is the one. but it is designed to be used in high heat applications. rear dif would be fine with ultra blue, or black even.
John

__________________
John HAUL AWAY, OR CRUSHED CARS!!! HELP ME keep the cars out of the crusher! A/C Thread
"as I ride with my a/c on... I have fond memories of sweaty oily saturdays and spewing R12 into the air. THANKS for all you do!

My drivers:
1987 190D 2.5Turbo
1987 560SL convertible
1987 190D 2.5-5SPEED!!!

1987 300TD
2005 Dodge Sprinter 2500 158"WB
1994GMC 2500 6.5Turbo truck... I had to put the ladder somewhere!

thanks for the responses.

so im still a little confused...here are the sealants i have lying around...which one would you use? im leaning toward soft setting.

Hard setting:
http://www.permatex.com/products/automotive/automotive_gasketing/gasket_sealants/auto_Permatex_Form-A-Gasket_No_1_Sealant.htm

Soft Setting:
http://www.permatex.com/products/automotive/automotive_gasketing/gasket_sealants/auto_Permatex_Form-A-Gasket_No_2_Sealant.htm

I have some of this too:
http://www.permatex.com/products/automotive/automotive_gasketing/gasket_sealants/Permatex_Hi-Temp_RTV_Silicone_Gasket_Sealant.htm

dd

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'85 300D, 'Lance',250k, ... winter beater (100k on franken-Frybrid 3 Valve Kit)
'82 300D, 'Tex', 228k body / 170k engine ... summer car
'83 300TD Cali Wagon 210k, wife's car