John's correct. Do not use ANY additive. That stuff was for older limited slip diffs, which you shouldn't have (and don't, according to your test). For the older trucks (~1995), GM 85w-90 GL-5 was the recommended lube. Problems with some later on found the use of synthetic 90 GL-5 cured the issues.

The Gov-Loc is open (and should spin freely) until locked, exactly like an open diff, until it locks. With both tires off the ground, you should be able to spin one side by hand (or foot) fast enough to engage the lock. The wheel should lock and jerk at this point. The 100 RPM differential wheel speed may sound like a lot, but it isn't, and with both wheels up, it only takes 50 RPM's on one side to get it to lock (50 RPM's forward on one side + 50 RPM's reverse on the other side = 100 RPM differential). I can't tell anything by looking at the pic you posted, and I couldn't get the larger images to load at your picture album site (tiny thumbnails only??), so I can't tell what you have. Try posting the larger images in this thread, like you did the first one.