I just built mine from new.
I used o-rings that people use for the front driveshaft stops inside the cups of a tamiya mini diff.
I too found that it leaked a little from around the pulley, so i just smeared some associated diff grease on the gaket, i think its too thin or worng type of material. seemed to fix the leaking. When i say leaking, i probably mean a small seeping thats all.
In terms of the 50mm shafts I have no idea what the issue is. I have installed it in the T3 with 52 mm shafts and the only time I can get it to bind is if the camber is greater tha 4.5 deg and the wheel is lifted about 15cm from level. eihter on of these i can't see me either using or happening in a race situation, unless i crash it, which means the gear diff binding will be the least of my worries. I am using the standard xray blades though which I have found are thinner than some after market types.