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The ends of your axle shafts should rest in those cups. The flat side of the cup rests against the center pin. You should be able to use the stock thrust washers - unless the clearances are off. If it's too tight (it sounds like yours is borderline), what happens is that it won't ratchet and just stays locked all the time. With that little clearance, it's physically impossible for both sides to be unlocked at the same time without exploding your carrier so your description of "unlocking too much" seems off. It sounds like it's working, but you need to get used to driving with it. Make sure both tires are as identical as possible - same size, same treadwear, same air pressure. It matters.
The ends of your axle shafts should rest in those cups. The flat side of the cup rests against the center pin.
You should be able to use the stock thrust washers - unless the clearances are off. If it's too tight (it sounds like yours is borderline), what happens is that it won't ratchet and just stays locked all the time. With that little clearance, it's physically impossible for both sides to be unlocked at the same time without exploding your carrier so your description of "unlocking too much" seems off.
It sounds like it's working, but you need to get used to driving with it.
Make sure both tires are as identical as possible - same size, same treadwear, same air pressure. It matters.