There is play when spinning my rear wheels on lift...

So, to follow up my clunking noise thread... I put it on a lift at work today and the rear wheels, when spun by hand, seem to have a degree or so of free rotation until it engages the differential and starts spinning the opposite wheel. It seems that this play is what is causing the clunk. Is this normal, or does there seem to be something wrong with my diff. If that's the case, what part would wear/break in the differntial that would cause this play?

The way you decribed your test,Id say thats normal and not part of the "thunk" your looking for!You needed to have someone holding the other wheel and also hold the pinion yoke to tell about any movement.There is going to be backlask in both the ring/pinion and the side/spider gears just due to normal set-up and wear.