Since the pinion bearings use a crush sleeve there is not a specific torque rating for the pinion nut. The correct torque is once the pinion bearing has a specific pre-load on it. If the 160 ft-lbs was not enough pre-load that may explain why it worked loose. The correct procedure is to tighten the pinion nut on the cruch sleeve untill the slightest resistance is felt in trying to rotate the pinion. Once you are there tighten the pinion nut in small increments until the correct pre-load is achieved. In this cas (Sterling 10.25") it should be 16-29 in-lb for new bearings and 8-14 in-lbs for used bearings. Be careful those are IN-LBS. If this is not clear here is a write up I found:
"Crush Sleeve Design: If you are unsure about getting the correct pinion depth, it may be easier to install the pinion without a crush sleeve until the correct pinion depth has been established. Always use a new crush sleeve for final assembly. Slide the crush sleeve on the pinion shaft (unless you are using the trial and error method) and install the pinion through the rear of the housing. The yoke usually must be tapped on while applying pressure on the pinion gear head to hold it in place. Use an impact wrench or huge breaker bar to apply the torque necessary to crush the sleeve. Proceed very slowly so that you don’t overload the bearings. The pinion preload will be zero until the bearings contact the races but will then increase very quickly. Use an inch-pound torque wrench to check the preload. If the pinion bearing preload exceeds the specified allowable range, install another new crush sleeve and start over.
Preload Shim Design: Clean the shims completely so that there are no particles that may cause a false preload reading or cause the shim stack to change thickness over time as the vehicle is driven. Slide the shim pack over the pinion shaft to the shelf. Use the original shims on the first assembly or add 0.003" to the original preload shims to make up for the bearings settling into the housing. Tighten the pinion nut to approximately 250 foot pounds. Go slowly so as not to damage the bearing if the preload shim stack is not thick enough. Use an inch-pound torque wrench to check the preload. If the preload is too loose then remove shims so that the bearings will be tighter against the races and increase the preload. If the preload is too tight then remove the pinion gear and add shims so that the bearings will not be as tight against the races.
All Designs: After reaching the correct preload, moderately tap both ends of the pinion to seat the bearings, races and yoke. Be careful not to hit the pinion so hard that it damages the bearings. After "seating" the pinion, check the pinion bearing preload again.
Crush Sleeve Design: If you are unsure about getting the correct pinion depth, it may be easier to install the pinion without a crush sleeve until the correct pinion depth has been established. Always use a new crush sleeve for final assembly. Slide the crush sleeve on the pinion shaft (unless you are using the trial and error method) and install the pinion through the rear of the housing. The yoke usually must be tapped on while applying pressure on the pinion gear head to hold it in place. Use an impact wrench or huge breaker bar to apply the torque necessary to crush the sleeve. Proceed very slowly so that you don’t overload the bearings. The pinion preload will be zero until the bearings contact the races but will then increase very quickly. Use an inch-pound torque wrench to check the preload. If the pinion bearing preload exceeds the specified allowable range, install another new crush sleeve and start over.
Preload Shim Design: Clean the shims completely so that there are no particles that may cause a false preload reading or cause the shim stack to change thickness over time as the vehicle is driven. Slide the shim pack over the pinion shaft to the shelf. Use the original shims on the first assembly or add 0.003" to the original preload shims to make up for the bearings settling into the housing. Tighten the pinion nut to approximately 250 foot pounds. Go slowly so as not to damage the bearing if the preload shim stack is not thick enough. Use an inch-pound torque wrench to check the preload. If the preload is too loose then remove shims so that the bearings will be tighter against the races and increase the preload. If the preload is too tight then remove the pinion gear and add shims so that the bearings will not be as tight against the races.
All Designs: After reaching the correct preload, moderately tap both ends of the pinion to seat the bearings, races and yoke. Be careful not to hit the pinion so hard that it damages the bearings. After "seating" the pinion, check the pinion bearing preload again."
The shim design mentioned in the article is for things like the Dana 60's etc where the pinion nut torque is around 200-250 ft-lbs. and usees both inner and outer shims to set pinion depth and pre-load.
Hope this helps
Bruce
