[Blazer1970]

You want to re-pack the wheel bearings with normal wheel bearing grease. You DO NOT want to pack the lockout hub with any kind of grease. Just lightly grease the moving parts of the lockout hub with normal grease so that they move freely. It is normal to have that much in and out movement in the shafts. When the lockout is re-assembled there is a snap ring at the end of the stub shaft that keeps the shaft secured in the hub assembly. The inner shaft needs to be able to slide in and out of the differential because it moves in and out when you steer the truck.