Dana 60 Trac - Lok Problems

[frydaddy]

I recently purchased a '94 IDI E-350 with a Dana 60 Trac - Lok. I was told that the rear end was "out of it" and was said to "make noise." After removing the cover and draining it, all of the gears look to be in good shape, but after I poured the fluid out of the pan there were metal shavings that looked like silver glitter in the bottom. They were very fine - you couldn't feel them between your fingers.

Any help or suggestions?