Well picked up a junkyard Toy v-6 axle and the front pinion bearing had gotten so hot it disintigrated and welded a part of the bearing race to the case. I was able to knock out a little over 75% of the race but the remaining portion seems to be fused to the case. Is this something I can get machined out? or am I always going to have problems with the new race spinning?

From what i know when a bearing has spun to that degree, that it usually fries the housing. I would not risk it, you could end up dumping a grand in gears, bearing, and a locker, to find that after a couple runs your diff is toast.
I would only try to save it if it was something really rare or expensive, like a rc60, but for a v6 toy diff i would not do it.

Ian-