"Klunk" in rear diff?

We put in a used D35 rear axle with 4.56 gears, in my son's 1988 cherokee. Supposeable recently installed gears in good shape.

Been in for about two months, just recently he started getting a klunk in the rear end when he lets the clutch out and gives it gas. Then when he lets off the gas while in gear, it will klunk again.

Ok, so first thought was the u-joint. Had my son put the jeep in neutral, foot on the brake. I crawled under and tried turning the drive shaft looking for play in the joint. The joint seems tight, but there seems to be a lot of play in the rear diff. I can turn the drive shaft about one inch in both directions before it stops.

Should there be that much play in the rear diff with the trans in neutral and the brakes on? I'm I doing something wrong? Is there a different way to check the u-joint?

The jeep was recently lifted in the last couple of months, but the problem just recently started. I still lean towards the u-joints, but it's not making much sense.

Any suggestions would be appreciated - Thanks

transmission mount or u joint come to mind. Pull the diff cover to inspect. Check backlash if you have the dial

Could also be the slip yoke on the drive shaft sticking.

Normally that sound is U-joints, but 1" of play in the diffy is way too much, sounds like internal gear or bearing problems on the diffy. Mine has less than 1/4" of play if that, and I was just checking mine for a similar problem, grinding noise on sharp hard right turns. I did find a missing exhuast pipe bracket bolt on mine and a bad front driveshaft U-joint. On the U-Joints you do need to push really hard up and down at several points on the joint to test them for excess movement. They can be hard to detect as bad unless they are really bad.