Yes, it's a crush sleeve, and it can go in either way on that one. If you've taken it that far apart, you'll probably need to buy a new one, as it's very seldom possible to get the correct pinion bearing preload with a used sleeve. It's designed to squeeze down once, and retain its length as it's crushed. That's what the bulge is all about. With a new sleeve, there will be lots of free play in the bearings, and you'll have to put enough torque on the pinion nut to squeeze the sleeve to a shorter dimension. (LOTS of torque!) I use a 3/4" drive breaker bar and a cheater when setting crush sleeve length, until the point the free play in the bearings is almost gone, then I start nudging the nut a little at a time until I can set the pinion gear turning torque with an inch/lb. torque wrench. New bearings usually need about 15-20 in/lb. to keep the pinion moving once it breaks loose. Used bearings- - - -about 8 to 12 in/lb.

You get one shot with a crush sleeve- - - -no way to stretch one out if it's compressed too far. Good luck!
Jerry


"It is better to be silent and be thought a fool than to speak and eliminate all doubt!" - Abraham Lincoln
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