Hi
The grease is your choice but if you want a recomended product name...
I can recomend associated stealth diff lube for the diff (obviously) & black grease by the same company (or use stealth lube on both).
Another option is to use team Losi grease on everything.
As for the mesh of the diff gears try to find the tightest mesh that gives you the smallest amount of backlash (call this your benchmark setting), all this without grease on the gears, now add the thinnest shim you have in order to get rid of that small amount of backlash. your end result should be no backlashwith minimum drag.
Don't worry about the shaft or the spur moving that much. Mine move more and don't give me any issues. It's part of the design of the car. basically it's there to allow for chassis flex (if the car nose dives into the track surface, or diggs in, for example the chassis bends, now if the shaft had no free play built into it something would snap.
hope this helps.
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