Can someone tell me what is happening here?

You sound like another guy who could use a shop manual..........

http://www.forabodiesonly.com/mopar/showthread.php?t=244981

Is this axle for certain "all original?" I've forgotten the differences, some here, and take this for what it's worth

http://www.mymopar.com/Mopar8_75RearEndGuide.htm

Section 1: Thrust Block Variations

There was a difference in thrust blocks prior to 1964 that make center section interchange, as well as axle interchange problematic. The thrust block, or "axle shaft thrust spacer", it thr block that both left and right axles butt up against inside the center of the differential. Prior to 1964, all open differentials used a thrust block was approximately 1/8" to 1/4" thicker than units made after 1964. The Sure Grip thrust block prior to 1964, however, was indentical to all 1964 and later Sure Grips and open differentials. In 1964, the thrust block width was changed to match the Sure Grip thrust block width.

This difference in thrust blocks between Sure Grip differentials and open differentials required that two different axles be produced for each 8-3/4" housing manufactured. This is true of all 1959-1963 cars with 8-3/4"s.

A 1964 and later differential, or any Sure Grip differential, cannot be used with 1959-1963 rear ends and axles originally equipped with an open differential. The original axles must be machined or original Sure Grip length axles must be used.