Dale,
I replaced my diff a while back. I used Permatex Hylomar HPF along with a new gasket. It is a blue paste that is both water and solvent resistant. It's not cheap though appx. $7.00 per tube. I used this stuff on the diff cover and the hubs. No leaks. It is very important that your mating surfaces are clean and smooth-i.e. no nicks or fragments from the old gasket or adhesive.
