I used silicone o-rings on my MM locking hubs. They have never leaked.
Bought a hundred 75mm x 2mm. Grease them up well and they fit the MM hubs perfect without fail.
(The Self Locking OEM units I pulled from my stock GM 10-bolts, are available for anyone rebuilding a factory restoration truck.)
Just enough lube to keep them moist.
Too much grease is worse than not enough.
I over lubricated the internal gears the first time I went into my locking hubs. This causes the locking function to get stuck.
The amount they really need, vs the amount they need if they are leaking without the o-rings, is much different.
When I rebuilt my axles, the plastic washers, all the way inside, were cracked and the inner most seals were hard/leaking.
I had to flush out the axle shaft tubes, because water had infiltrated the inner tubes, from leaking inner seals and the cracked plastic bushings.
I read a bunch of on line stories regarding the inner tube seal kits, where they put a plastic blocking insert into the shaft to stop water infiltration and the long story was the inner plastic tube sealing system caused moisture to build up and actually caused worse inner tube rusting.
My gut instinct to install these was wrong. A full rebuild, using new CV joints and a complete new bearing, seal, washers kit, worked.
The plastic bushing I'm referencing at the beginning of this post, is the dark gray plastic washer used on the main bearing race.
If it is cracked or worn, you'll get water leaking into your bearings and inner tubes. Throw it away and buy a new one for both sides.
The plastic parts I read NOT to use, is the inner tubing, aftermarket tube blocking systems, which claim to block water from entering the axle shaft differential.
I read a lot of guys who installed them regretted doing so, because the internal rust was double or triple the damages from leaking standard OEM component failures.
Orange silicone o-rings are a solution at the hub. New gray plastic OEM washers on the very inner most bearings and new seals are the solution.
New CV joints, like the ones shown in the pictures above, are the solution.
When the CV U-Joints are worn, (they look like u-joints but are actually called CV joints here at the axle hubs), they cause the inner seals and the plastic washers to leak from shaft wobble. Especially on hard worn inner seals.
It is virtually impossible to see the CV joints failing, unless you clean them and watch for rust forming outside the bearings seals.
Your picture is typical and cannot show CV bearing leakages or rust, since everything is rusted.
I'm not saying they are bad. I'm saying, unless you swap them and completely rebuild everything, including new spindles, if they might be worn, you'll be guessing at what's wrong or what's leaking. If the CV joints are slightly worn, the plastic washers inside the inner most bearings are shot.
Some ranchers claim to change CV and U-joints on farm trucks every year, as basic maintenance on hard driven farm pickups.
If you drive 30,000 miles per year and off road your 4wd, it could be normal to swap the CV joints every 4 years, just to be safe.
If you have never changed your front shaft CV joints, it might be time to install Spicer OEM Joints.
They come sealed without grease fittings.
You do NOT want grease fittings here. Buy Spicer and bite the bullet.
Most of the sealed Spicer Joints and CV joints are better quality, when they have NO GREASE FITTINGS.
If the Zirk fails, it leaks water into the joint. The black plastic u-joint seals, are superior to the blue plastic u-joint seals, which come on the u-joints with grease fittings. Non-grease fitting joints are also better balanced. They cost more money... which tells you????
I used Yukon spindle on my passenger side, because threads were worn. New OEM lock nuts, New Spicer lock washers and a brand new 1/2" torque wrench. (The Yukon spindle was mint).
My rebuild is water free for three years now. When I rebuilt my brakes, (before my trans blew out), the internals were good as new.
No water infiltration.
Your water could be leaking from the inner bearing seals being hard, worn or oblong... and because your CV joints are shot.
The vent is critical. Do not discount a rotten vent hose, vent fittings or breather valve being cracked.
Rebuild everything on your spindles, top to bottom, A-Z. Drop your differential oil and wash it all out, and refill with clean gear oil and a new diff gasket or seal it properly with sealer.
You'll be glad you know what's been done by YOU and you'll have the tools to fix other's trucks when you are done.
Take pictures and post them here, so other's can see how you rebuilt it and what happened after you cleaned everything up.
Good luck!
