Thanks for the information.
The parts I am referring to are put on the top gearbox arm in the following order (inner to outer - nut side)
1. Metal inner slipper shoe (same as outer shoe from visual inspection)
2. Orange/yellowish slipper pad
3. 86 tooth spur gear - Team Losi default with kit)
3. Orange/yellowish slipper pad
4. Metal outer slipper shoe
5. Diff spacer black plastic thing
7. Spring cap
Somewhere between 2 and 8 is the problem. Yea I really narrowed it town eh?
I talked to my local hobby shop and they said if I can't get it together right to bring it in so they can take a look. They have never heard of this type of problem before either. However they did say that sometimes its hard to get the thing to line up correctly.
The only thing I can think of thats happening is that while I remove my fat fingers from the assembly that the slipper pad is moving off the proper placement (where the notches are). Everything else seems to be in order.
I may try super gluing the spur gear side of the slipper pad to the spur gear itself so that I can remove any possibility of the pads being misaligned with the notches.
I'll let everyone know how it works out.
My goal is to race this thing next weekend so I have to get it together!