If its not the Ball joint as mentioned above, are they sure it is the diff and not the mainshaft/transfer gear worn. That (aswell as the ball joint) is one of the main causes of bang/knock/clunk when taking up drive/changing gear. There is not much left to check, everyone else has mentioned most possibilities.
Hopefully going to get to have a look at the ball joint later when i get back from work. When it was in the garage they had the transfer box back off and the shaft out. Said that it was fine and so was the gear.
Checked the a frame ball joint by the jack up the rear wheel and lever a wheel nut method. No movement in the axle apart from the first slight bit that you get from the propshaft slack (i think thats what it is? the bit of movement same as when you stop and put the handbrake on and take your foot off the brake). so i guess all is good there and the garage's diagnosis of the center diff is right?
