An example of over-heated axles - stuff you get from the junk yard
I made a set of setup bearings by opening up the ID of both the big and small pinion bearing with a $10 die grinder. The .030" pinion spacer was about perfect but you can see the effect of various pinion depths.
The following pictures show how much difference .022" of pinion depth makes on proper gear meshing. Backlash was set to .007" in all cases. Watch as the drive and coast patterns swap ends.
.020" Pinion spacer
.025" Pinion spacer
.030" Pinion spacer
.042" Pinion spacer