B7500hsd diff lock problem

[C4Ranch]

Hi, 1st post and need help. My diff lock peddel will not return up normally. I tore diff axle assembly apart and what is happening is the pin on the shaft is falling down when the peddle is depressed all the way preventing it from rotating back up. The dog clutch looks fine and I see some wear on the differential case teeth, but could that be it? Could they be worn so much its causing the shaft to over rotate allowing the pin to drop? I don't want to replace the diff housing at $100 if that's not it. Anyone with experience here or happen to have a diff housing apart where they could provide me some measurements of the theeth?

Thanks!