Is the whole axleshaft moving in and out or just the wheel stud? its completely normal for the axleshafts to have some in and out play on an open differential. I'm not sure about lockers or Limited slip diffs.
Have a 2000 with open differential with quite a bit (at least 1/2") of horizontal play. I don't see how this could happen unless the "C" clip is worn/damaged, or the idler bar is worn/damaged. Any input? Driveline shop in Reno wants to replace the diff & bearings - ouch!