My 1997 4Runner failed inspection about a week ago due to the gear oil contaminating the passenger side brake drum, a tell tale sign of a bad axle seal. I was aware of this, but had been pushing it off. I began work to fix the problem yesterday morning and was able to quickly get everything disassembled. Before removing anything I checked for play in the wheel bearings and everything seemed very tight to me. I am still getting some estimates to get the bearings and ABS rings replaced, but currently I just don't want to spend that kind of money as a college student. It would still be $500 - $600 even if I take them the axles, $200+ if I bring them the parts too. At this point I think I am just going to replace the seals, and if they blow again I will go ahead and do the bearings and all. I am also planning on doing the extended breather for a few bucks to make sure that was not the culprit.

I have been following Timmy's video on the subject here...
Toyota Rear Axle Seal/Bearing Replacement (ABS Rearend) - YouTube

And the popular thread from this forum here...
Rear Axle Seals: The Ultimate Information and Replacement Thread (3rd gen)

So far it has been a very easy job and I haven't had any hiccups, but when I pulled the passenger side axle out though I was surprised to see a mangled seal on the axle shaft. Here is a picture...
Imgur: The magic of the Internet

For comparison, here is the axle on the driver side, came out as expected...
Imgur: The magic of the Internet

I assumed it was the axle seal that came completely loose, but when I looked in the housing the axle shaft seal seemed to be in place. I am super confused and haven't seen anything like it. Here is a picture of the passenger side axle housing...
Imgur: The magic of the Internet

There is a seal on both the shaft and the housing, and as far as I know there is only supposed to be one. So did the person before me somehow jam two seals where there should have been only one? Or am I completely missing something?

Second weird thing in this job, on the driver side housing the owner before me covered everything in RTV gasket maker. You can see that here...
https://imgur.com/a/xIFNtyC

After cleaning it all up and removing the seal I have found some gouges in the metal. Check them out...
https://imgur.com/a/jlxuZRn

I assume the RTV was supposed to fill these gouges in the metal? I guess it might have kinda worked since the driver side didn't have gear oil all over the wheel, but the axle seal had definitely failed. So, what do I do about these gouges? Just leave them?

In summary, is the person before me insane, or am I? Two seals on the passenger side and the driver side is full of RTV. Any clarity or advice is appreciated.

From the pics your posted, the last person to do the job didn't know what the hell they were doing. The inner retainers and ABS tone rings look like they were pressed on until they bottomed out on the outer tone ring which is nowhere close to being in the proper position. 4-5mm of polished axle showing above the inner retainer is about right to get a proper mating on the inner retainer with the inner axle seal. No way was the inner axle seal doing anything to keep the gear oil from getting past and into the bearing and eventually into the brakes.

The gouging on the axle housing is from somebody not being careful with a hooked seal puller. Or, who knows what they used, because they didn't do a good job. This is definitely why they used RTV in hopes to prevent a leak.

Since you watched our video (I'm Timmy), you know how the job should be done. If you install the axle seals yourself, I would also suggest using some RTV but I would use the Toyota Red FIPG instead because that is meant to use for gear oil applications. That gouging could allow gear oil to get past.

Good luck!

@mtbtim , no way to suger coat it is there Tim !!
Gona be some of a PITA to fix also, Used cars like box of chocolates sometimes.

Thanks so much for replying Timmy! Your videos have helped me immensely. Looks like I will be investing in a press, the puller tool, and some new parts. I'm really glad you noticed they were pressed in farther than they were supposed to. Any insight as to the second seal I talked about on the passenger side? Is it something I missed? Or did the previous guy really mess it up?

I don't have any clue how that passenger seal got so mangled. I've never seen anything like that and I've probably done this job around 15 times.

While I was a student I could not afford the timing belt job on the 4R, so I source the OEM belt, cam and crank seals and AISIN water pump. Tensioner and bearings are from a wracked 4R from a yard. It's been 12 years and still going strong. After the graduation and getting a job and several years later, I now own a LC and a 21 Tacoma.. now looking for a 22 Armada. Yes, still have the 4R in pristine condition. School is VERY important..

If you are near, I'll help you to get the rear axles done for free.