Not too strange. If you flatten out the washers you have a large amount of play with the output axle gears (side to side). So thats how the case got chewed up.
I am inclined to agree about the pinion bearing failure (I am rather abusive to it), but if the center of the diff is slamming back and forth as mine was it may help bearing failure along pretty substantially. I'm also pretty sure the flange being used as a grinding wheel was not helping.
Ive had this unit in play for about 2 seasons now and this is the first hicup it gave me (and damn I beat this thing). I would buy it again in an instant
In short check your washer play.
I was using the stock washers.
view of case grinding
view of still intact obx
[update]
ok so I reasembled the obx with 1.25 turns after washer contact. installed new crown and installed diff into new case. Runnout and lash were equal to original open unit. I go to slap in the ouput shafts and the driver side is a hair from the case. If i apply some pressure to it I can make it rub the case slightly. Open to ideas.
Ive got a feeling im going to feel stupid at the end of this.