I believe all is lined up. I ran my finger on the inside to ensure no burrs, or anything. It's a puzzle, I believe I did this years ago and don't recall this problem? It seems to be getting in to where the o-ring makes contact. It engages with the differential, but getting it to seated, seams to be a problem?
Thanks!
After further research I believe I have gotten the wrong O-ring clip, it doesn't compress small enough to pass thru the spline! I'll keep everyone posted!