Front Differential - Bearing?

[TexasAggie]

I've got a 1997 (which having been away from the forum a while...I am surprised to learn that it is now a "classic" truck)

 

Anyway, my 1997 K1500 has developed a nice little "clunk" somewhere in the front axle. I was replacing the tie rods over the weekend and happened to bump up against the half shaft on the driver side. It has about 1/8" of play in all directions at the front differential. The half shaft bolts up to flange coming out of the differential and the play is in the differential. I have never been into one of these, but to mee, the play seems excessive and I am really surprised it is not leaking...and I did check the fluid level - right where it is supposed to be.

 

Is this much play normal or is there a wear bushing or bearing in the differential that needs to be replaced - rebuilt???

 

Thanks...