But you get it...I didn't drive down the road, I clunked down it.
Obviously I got fed up with it...I installed subframe spacers in the spring hoping to remedy the problem. They tightened up slop from the subframe floating around, but the "clunk" was still there. Then I had a timing belt problem, and parked the car all summer repairing it. Finally, I get the car back and I'm driving around loving it, but I'd forgotten about the problem in the rear end. It got worse by winter, and I decided to change the differential bushings.
Let's get down to business:
Differential down!

OK, sorry that's the only picture I have, because the job was extremely frustrating and I didn't think about taking more pictures.
The easiest part was removing the diff...cleaning the rubber off of the metal pieces that needed to be removed - that was a nightmare. It took forever. I also had to install and remove the differential a few extra times because I had a hard time getting the inner sleeves on the subframe to line up properly. The job was no fun, but lift and access to shop tools made it easier (we have a gazillion different presses in the "bmw special tools" room, that was a big help, and so was the transmission jack I used to support the differential).
After I got everything buttoned up, I could feel the improvement immediately. I could tell it was fixed just by pulling it out of the lift
Drove it home that night clunk free, and I drove it around all day today with no more clunkage. I am very happy with the results! Anybody who is having similar problems to the ones I described, I would highly recommend some new differential bushings. They make the ride SO much smoother. It's easier to drive, because now I don't have to try my hardest to minimize the clunk noise every time I shift. It's simply not there anymore! It really feels great.
On a scale of 1 to 10, I would rate this job a 7/10.
1 = oil change, 10 = home-made wiring harness with a butter knife, butt connectors, and a lighter.
