8 3/4 gear set up help

Is this the tool you are using? Not sure how accurate it could be since you have to hold it with your finger while you insert the dial indicator. I've never used it myself so I can't say either way but it does not look like there's any way to firmly set it in place - that could account for a lot of variance. I could be wrong though, seems like a decent idea for a quick set up.

I use this tool. Pricey, yes, definitely but dead-nuts accurate. The difference between the two tools is that the MW uses machined discs that mount in place of the actual bearings. The caps are tightened down so there is a full 360 degrees of clamping force like there would be when the bearings were in. Kind of like honing a block with a torque plate, similar principal.

A gear set is of course a matched pair but it still has to be installed in the correct relationship to the case. Pinion depth has to be measured because of machining tolerances in the case, not the gears.

Do yourself a favor and find some marking compound. I think things might be a little more clarified with the right indicator.