Spent some more time playing with the diff. With the rear of the car in the air and the transmission in park (hand brake off), the drivers side wheel does not turn however the passenger side does a bit which is a clear indication that the cone inside the LSD is worn on the passenger side and the movement is the backlash been taken out of the spider gears.
Went to Steelie Gears and had a chat with Tony. he's fairly confident that it's fixable, however the M80 LSD is a bit different internally compared to it's smaller M78 brother. In the M80 the gear and friction cone are a single item and can't be shimmed up unlike the M78 where the cone and gear are separate. No worries though, if the cone or carries is to badly worn what he does is destroy the original cone to remove the gear, he than uses a new cone for an M78 and can then happily shim it up better then new.
Explained it to the missus that diff needs a rebuild and she's not totally upset with me, now I just need to slip in a new set of gears with the LSD centre rebuild and were laughing.
Just got to pull the diff out and drop it around and he'll get it sorted.