1997 Rear Diff.

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IMO the odds favor the problem is a bent cover from over torque. Take the cover off and use a straight edge to check. If you are careful it might be possible to restore to "true" status by using a hammer and dolly.

Reinstall using only silcone sealer (no gasket required). Torque to 28-38 foot pounds except the bolt holding the tag. Torque to 18-28 Foot pounds.
 
replacement cover shouldnt cost much if it is bent , but as stated above you can check it with a straight edge to see if its bent , when you reseal it next time torque it down in criss cross pattern and use silicone with no gasket thats how Ford sealed them from the factory
 
my rear differential leaks. i took the cover off and replaced the gasket. still leaks. what are the odds cover or the diff its self and if its the diff what all do i need to replace to take care of it?
To add to what Burns said, make sure that your pinion seal is not leaking and there should be a vent somewhere on the Diff-housing that sometimes gets clogged and helps in the Pinion-seal blowing and leaking fluid.
 
I accidentally tweaked mine jacking the car up.....leaked like crazy....those cheap tin covers are junk.

I did the exact same thing in the fall. I replaced it with one of these from LRS:

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http://www.latemodelrestoration.com...ng-Gt500-Style-Finned-Aluminum-Rear-End-Cover

along with one of their super-sano gaskets:

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