Thanks to prostreet6t9, I have finally found it. Just goes to show when you think things are right sometimes you just need to go back and double check.
Axels were too long and hitting inside the posi. I measured wrong. I bottomed my tape against the pin in the posi and I should have been clipping it on the side gears. I put everything in the old ford center section, stuck it in the housing and re measured. Both axels were a 1/16th too long. Just that little bit was causing it to hit the block in the center of the posi. I ground a good 1/16th off each axel and re taperd them by hand. They turned out pretty good.
I set up my new ring and pinion in the aluminum housing and now I think the posi is bent somewhere, the pattern was moving up and down the tooth as I spun it.
I am so burnt out on this thing that now even though I am pretty sure this is whats wrong with it, I do not want to work on it.
prostreet6t9, Thank you sir, I owe you a beer.