how do you know when your diffs are bad?

Depends on whats going wrong - typical prob is ring and pinion are allowed to pull out of mesh enough that the pinion can skip over teeth on the ring. Eventually this will strip a tooth , a few or several teeth off the ring or I have seen teeth break off on the pinion. As long as its only a few and they get pushed out of the way, it'll drive and may/may not make noise where it goes over that bad spot. When it gets to be several teeth, pinion just spins and you get no power to that end.

Spyder gears are diff -when they go, tends to lock up everything. In a typical trx diff (the 16.8 may be better, idk), spyders are the weak link. If its not shimmed, and still in plastic cases, its usually ring gear. When you put diff in alum case with alum diff cup, shim right, then diff probs are usually spyders but usually only after a pretty good service life.

I just put a set of 16.8 diffs under my old Emaxx.