My mechanic told me that he has to take off the whole differential and the seal on the inside (where the oil is held) is broken. Does this make sense to anyone?

 

Still not too bad of a price. The seals are located in the differential housing. In order to replace them your mechanic has to drain the diff, pull tires and brakes, pull hub assembly and axles, then remove the diff cover, remove the carrier, and remove the seals. Then it all goes back together, with new seals, new gasket after scraping off the old crap and fresh gear oil. Based on what mechanics are getting per hour now a days, I still believe it to be a good deal.

 

Yes, that's what we've been talking about this entire thread. That's why the labor cost is so high.