d35 diff help please (pic+vid)

I first put this in Other_tech, but it's still a d35

This is for my brother's 89 YJ d35 rear...
He's been hearing some low-pitch grumbling from the rear so we pop it open to check it out. The teeth on all the gears look good but we find some metal at the bottom. It looks like some seal or shim behind the right spider gear in the diff is broken (see pic). Also, there is a ton of side to side play (1/4"-3/8") in the diff (see vid). Based on searching here it looks like the diff bearings need to be replaced. But what about that metal ring? Since it seems people are trying to give away their d35s, is the best bet just to replace the whole diff?



Short video of play in diff

Thanks,
Joe

Basically what I'm trying to find out is if this can be fixed, or does the whole unit need to be replaced? This is a DD so time is a big factor.
-Joe

Wow, that's a lot of slop. My '89 did about the same thing and I had to replace all the bearings. I got the complete bearing kit with all the shims from Randy's Ring & Pinion.