ok Maxx---I agree on the botched job. Good choice not to drive it any further than you had to.....

If it were me, first thing I would do is slide the axles out/remove the 3rd member and move the ring gear back and forth and check for some backlash. If there is no lash then the pinion is riding tight up against the ring gear and that will definately make a nasty noise....it will also cause that gear oil smell you noticed. I am not familiar with Sierra gears. Give us a play by play on this thread.....have a digital camera ready to snap some clear close-up pics of the painted patterns....you have some of that Chevy GM gear marking compound pn #1052351 don't ya?
I did a Google search and can't find a thing on Sierra gears....I would like to know more about them. Maybe you could describe all the markings on the side of the ring gear. Thanks ZUK

ps----see this http://dreamwater.com/zuk/projects.html