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My plug is very tight before the red 'Posi Fluid Only' tag is tight and it spins freely. Is that the way it is supposed to be? The plug and diff threads look fin so I do not think I have a cross thread situation.
Just tighten the plug until it is snug or a little tighter. It is a tapered plug so overtightening could crack the differential case... Don't worry about the plastic tag.
The plug is a pipe thread. You should use a little teflon pipe tape on the threads to prevent minor leaks.The posi tags will rotate after the plug is tight. Wire brush the threads to get a good seat with the housing.
Gary
On my 81 the red tag sits on the plug shaft where there is no threads, so it will spin when the plug is tight. I just cleaned everything up good and put the plug back in with no sealer, this is my third oil change and no problems.