Did you remove the differential? You want the axle housing empty while messing with the pinion, only once that you have set the pinion preload properly you install the differential. Therefore as long as the diff (and therefore axle shafts) is out of the housing tires can remain on the ground, since there is nothing to turn them and mess up you readings. In other words:
1) start with axle housing completely empty.
2) install pinion only with spacer and some shims, no seal on the front.
3) slide yoke on pinion and tighten the nut, then check how easy it is to turn the pinion. Your are effectively measuring the drag on the pinion bearings alone, the more preload the more drag and the higher torque value you will see.
4) if the pinion turns too easy that means there is not enough preload, you have to remove the yoke and pull the pinion again and use a shim stack that is somewhat thinner than what you had.
5) if the pinion turns too hard then your preload is too high, again remove yoke and pull pinion and change the shim stack to one that is slightly thicker.
6) reinstall pinion and yoke, torque the nut, and check bearings drag again. If still not right pinion comes out again and you change the shim stack again, then reinstall and take measurements again - you do this till you get to where it takes 10lbs-in to overcome the bearings drag.
7) when you get to that point, remove the yoke again, install front seal, reinstall yoke with RTV on splines, put loctite on the pinion nut, and assemble it for the last time.
8) only after all of this can you reinstall the differential and axle shafts. But again, while working on pinion preload the axle housing must be empty, nothing in there except for pinion and its bearings (and yoke obviously).
Clear as mud?