Jeristair: I did crawl under there last night and gave it a good wiggle to make sure it was seated right. It definitely was. When the wheels were on the ground, that CV axle was jammed up in there quite well. I had practically no play in it. I also took it back apart to make sure the free wheeling hub was seated properly. Seemed to be so. Then I reassembled everything, put the axle through, and it still wasn't right.
Slartibartfast: I was able to verify that the needle bearing was seated the way it should be. It was flush with the inner portion of the hub. I don't think it's bumping up against the needle bearing since they are flush and I could drive them in just a hair past flush if i wanted. I wish they were sticking out so this would be an easy diagnosis. I also rechecked the grease seals, even beat on the rear one a little more and nothing. All are flush to where they should be.
R50JR: I also tried that. Unfortunately, that didn't get me anywhere.
During my investigation, I removed the outer bearings and rechecked clearance with the axle: didn't change at all. Tried hammering on the seals a bit more to see if that helped: also didn't change anything. The only change I made that allowed the axle to poke through enough was removing the thrust washer and reassembling everything. So I was thinking maybe the new thrust washer is too thick! Nah, it's not. The old one measured at 4.48mm thick vs the new one of 4.50mm thick. I'm starting to think there is something funny with the grease seals. I put the outer bearing back in, then torqued it down to close to the 50ish ft/lbs the manual says to do for the preload then reassembled the flange. I shoved the axle in and it just barely starts poking the groove through. Wondering if I need to have that inner grease seal replaced with a different brand or something.