Do you have aftermarket one-piece axles or are you still running the stock 2 piece? In either case the amount of endplay you describe is too much and is probably contributing to your seal problem. Endplay with stock one piece axles can be adjusted by adding or removing shims located between the driver's side backing plate and axle housing flange. The factory spec is .004 - .008" endplay. When you set your endplay, both wheels must be off the ground or better yet, take the brake drums off to eliminate the possibility of any interference that may give you a false indication when setting of endplay. Remember that movement from one axle is transfered to the other axle through the defferential thrust block. That is why it is only necessary to shim one side.
If you have aftermarket one piece axles, there should be very little to no endplay since the bearings used contain endplay within themselves. If you have enplay with one piece axles, either your bearings are worn or they are loose in the housing and the bearing protrusion needs to be reset.
A loose pinion (in-out/up down play) is not good. If there is excessive rotational play but no in-out/up down play, the problem could be with excessive ring and pinion backlash, worn spider gears/ thrust washers, loose ring gear bolts (wouldn't remain loose for long--they would fall out and get caught between the ring and pinion. You'll know when that happens). or even excessively worn limited slip clutch plates. Clunking could also be from a loose or worn U joint and that is the first place I would check.