dstang97, if your 14 bolt pinion rotates about an inch, before contacting other gear teeth, you may need to tale off the diff cover and take a look at the ring gear/ pinion gear.
This is a strong gear set, and does not wear out or break often, even if seriously abused, but can have broken teeth or excessive wear, if water got in and was not drained before damage was done. Take off the rear cover, drain the gear oil, look at it's color, is should not be foamy, or cream like, clean out the gear set with spray cleaner, and you can see the gears mesh when you turn the pinion. By moving the pinion input flange back and forth, you can see if the clunk it made before is repeated, and what is making the clunk. if it it excessive clearance between the gears, they need to be replaced, same for bearings, sometimes the passenger side carrier bearing cap can crack, and become loose, and sometimes the carrier cap bolts get loose causing all-sorts of noises and damage, while still working the gear set.
Hope this helps.
ALFA2