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What is the proper crush sleeve setting?

Bill, ther eis a whole chapter about that in the service manual, so it would make for a very longer answer on here. but here are some of the adjustments; “ADJUSTMENTS 1-PIECE CASE Gear Backlash

  1. Install cam unit and thrust washer into flange end of case. Install pinion gears and thrust washer into differential. Ensure thrust washers are aligned with pinion shaft hole.
  2. Press side gear downward, and install pinion shaft and lock screw. If side gear cannot be pressed down enough to install pinion shaft, install thinner thrust washer.
  3. Rotate pinion gear closest to lock screw so one tooth is pointing downward (perpendicular to ring gear flange). Insert a screwdriver firmly between side gear and pinion shaft.
  4. Install dial indicator on ring gear flange, with indicator stem positioned on tooth of pinion gear closest to lock screw. Zero dial indicator.
  5. Pull pinion gear against case, rotate pinion gear back and forth, and note backlash reading. Repeat procedure on opposite pinion gear. Backlash should be .002-.010” (.05-.25 mm).
  6. Change thrust washer thickness to obtain correct backlash. If backlash is greater than specification, use thicker thrust washer. If backlash is less than specification, use thinner thrust washer. Repeat procedure for other side gear. 2-PIECE CASE Right Side Gear Backlash
  7. Install right side gear (cam unit) and side gear thrust washer into differential case right half. Using NOTE: If side gears have been replaced, adjust differential. Adjust clearance using correct thickness of selective thrust washers. Left and right side gear backlash must also be adjusted. NOTE: If cam gear, side gears or reaction block have been replaced, adjust differential clearance. Adjust clearance using correct thickness of selective thrust block and selective side gear thrust washers. Left and right side gear backlash and thrust block clearance must also be adjusted. washers, long bolt and nut, clamp right side gear unit into differential case.
  8. Install pinion gears and thrust washers onto pinion yoke. Install pinion yoke into differential case half. Loosen nut on bolt. Position one pinion gear tooth facing downward (perpendicular to ring gear flange), and tighten nut.
  9. Install dial indicator onto ring gear flange, with indicator stem positioned on one tooth of pinion gear. Pull pinion gear against differential case half. Rotate pinion gear back and forth, and note backlash reading.
  10. Ensure pinion yoke remains seated while checking backlash. Repeat procedure on remaining pinion gears. Backlash should be .010-.018" (.25-.46 mm).
  11. Change thrust washer thickness to obtain correct backlash. If backlash is greater than specification, use thicker thrust washer. If backlash is less than specification, use thinner thrust washer. Left Side Gear Backlash
  12. Assemble clutch plates in alternating sequence. See Fig. 3 . Use grease to hold guide clips in place, and install guide clips onto clutch plates.
  13. Install thrust washer, clutch plates and left side gear into differential case half. Using washers, long bolt and nut, clamp left side gear into differential case.
  14. Install pinion gears and thrust washers onto pinion yoke. Install pinion yoke into differential case half. Loosen nut on bolt. Position one pinion gear tooth facing downward (perpendicular to ring gear flange), and tighten nut.
  15. Install dial indicator on ring gear flange, with indicator stem positioned on one tooth of pinion gear. Pull pinion gear against differential case. Rotate pinion gear back and forth, and note backlash reading.
  16. Ensure pinion yoke remains seated while checking backlash. Repeat procedure on remaining pinion gears. Backlash should be .002-.010" (.05-.25 mm).
  17. Change thrust washer thickness to obtain correct backlash. If backlash is greater than specification, use thicker thrust washer. If backlash is less than specification, use thinner thrust washer. Reaction Block Clearance
  18. Install left thrust washer, clutch plates and side gear into differential case. Using washers, long bolt and nut, clamp side gear into differential case. Install right thrust washer and cam pack. Using washers, long bolt and nut, clamp side gear into differential case.
  19. Place straightedge across top of both side gears. Using depth micrometer, measure distance from face of straightedge to surface of differential case half. Subtract straightedge thickness from this measurement.
  20. Add measurement of both sides together. This is the side gear spread. Assemble both original reaction blocks together and measure thickness of both reaction blocks.
  21. Reaction block thickness should be 0-.006" (0-.15 mm) less than side gear spread. To adjust clearance, select reaction block with different thickness, or reshim left or right clutch pack. Ensure side gear backlash remains within specification." Of course the better way would be to check my answer on here 1988 Chevrolet K3500 Heater Core Replacement and follow the link to the manual. Hope that help, good luck.