What exactly is your lockrite doing? Is it locking/unlocking when driving in a straight line? Locking/unlocking when cornering?
I haven't installed mine yet... but I recall reviewing the install instructions from Powertrax cautioning to be sure the side gears (which you re-use from your diff) are not "heavily used" - translated meaning that your side gears have depressions on the sides of the teeth, the tops are rolled smooth and highly polished. If they are "heavily used" Powertrax states the Lock-rite won't function properly and states the side gears should be replaced.
I'm concerned about this point as well because the diffs I have are out of a 2000 model year truck. I have a 2002 with 150K on it and I am guessing there are at least as many miles on the 2000 diffs. I cleaned up my 4.88 diffs last night and punch-marked the caps and locks but you can't inspect the side gears until they are disassembled.
Another point Powertrax makes is reinstalling the pinion shaft block. Not perfectly machined and may fit better on one side than the other. Did you try setting it in and wiggling it around both ways when you placed it in the cluster to see which side appeared to fit best (to prevent binding)? Finally, excessively worn thrust washers can cause problems as well.