If you did not preload the bearings during the locker install, it will seem to develop more play. It is actually just what what you left in there. It is also important that when adjusting the backlash that you always stop when tightening, that helps keep the preload in.
I doubt that you wore a grove in the locker. If you had, the lack of oil would have made a very noisy diff.
Lockers are quirky, but they do get the job done.