I would say the bush needs renewing. It looks like either lack of lubrication or some debris has found its way into the bush. Also the surface where the seal runs looks damaged (or is this just how it looks on the photo), that needs to be sound or the seal will not last. You may be lucky that the shaft cleans up but it needs to be as good as the other one, to me it looks quite scored
1985 S3 1700 XFlow. Undergoing full restoration
It's good to see they are still quite deep, so probably not too much wear. The finish is poor but would probably recover if the drive shaft can be cleaned up. I would try some Autosol metal polish on the drive shaft and, if it cleans up to the original machine finish, I would put it back together and forget about it.
Re above - it is part of the case of the ATB unit so cannot be replaced. You would need to replace the complete unit - so you have nothing to lose by putting it back together. It is not the bearing so does not support the shaft - it just allows the differential action
I think the fretting on the drive shaft might need a bit more than autosol. If it were mine I'd use a strip of very fine emery cloth with oil.
I'd also change the diff oil - I've done this on my diff (same set up) with a machinemart oil syringe and the boot floot out. The plastic tube went in the filler hole, hit the ATB and went down to the bottom of the diff. Or you could unbolt it and upend it! I use OEM ford oil in mine (as used in the Ranger)
Thank you David and Ian,
Having removed the metal filings from the scored area with a magnet, I'm definitely going to change the Diff Oil - as expect there could be more inside.
Now need to decide on syringe or Diff removal approach.....
I'd be inclined to take it out and upend it. You've done most of the hard work of removal - just the 4 lots of spacer washers to catch or find when they ping across the garage floor :-)
Being a bit OCD, I'd probably buy some new and cheap gear oil and part fill it on the bench, use a driveshaft to turn the internals to try and flush out any more bits. Couple of 1/2 litre fills and empty shouldn't do any harm. Looking on internet basic gear oil is about 7 quid a litre.
That does look like there's more involved than just the alloy bush. So minimum I would remove the back cover and see if there any other obvious problems. Ideally it's off to Road and Race with it.