Front Axle Problem

[wyoman64]

Hey All,

I just took my new '69 K20 out for it's first real spin in 4WD and discovered a couple of problems and need some help figuring out what kind of costly repairs I can expect:

Problem 1: While driving in 4WD I get an intermittent bind somewhere in the front axle or hubs. It makes a really sickening "klunk" sound and it'll snap your head forward. I have Spicer hubs and it is very cold out. Could this be a hub not fully engaged?

Problem 2: While inspecting the front end I discovered that my right font spindle and hub assembly has some play in it where it attaches to the axle flange. (See the attached photo, area where there is play is indicated by the red arrow) There's probably 1/16" of slop there, what is involved in fixing this? Is the spindle/wheel bearing nut loose? Or, does the backing plate bolt to the axle flange?

Could the two problems be related?
Sorry for the dumb questions, but I'm new at this . . .any help appreciated.