So I have gear oil/ lube leaking out of the right rear shaft and a have a noise that I think is coming from the diff. I lifted the rear end and spun the tires and sounds like the diff.
If the gears are grinding does that mean they are bad?

You probably need new rear bearings/seals anyway. So pull both rear axles, then pull the 3rd and have a look. Sorry, but that is probably the easiest way to diagnose it correctly. Not a hard job at all. Good luck.

I'm sure I can get it apart and inspect it but i don't know what i'm looking for. What parts should i check and / or replace? How do i know they are bad?