Courtesy of Randy's Ring and Pinion and GM service manual:

http://www.dirtroadmagazine.com/gc.htm

After assembly set the backlash to specs then check for centered contact pattern from face to flank. Do not worry about pattern being centered from heel to toe. A contact pattern that is centered from face to flank
"ALWAYS" indicates correct pinion depth even if a pattern
that is centered from heel to toe can not be obtained.

Tip: Brush on a very very light coat of GM marking compound. Applying too much will make pattern more difficult to read.

Used Gear Sets
"When setting up a used ring & pinion I am basically concerned with the pattern on the coast side of the ring gear teeth and I pay very little attention to the drive side of the gear teeth. This is true for most used gear sets but in some cases both the coast and drive side should be considered". When checking coast pattern I rotate drive axle 5 revolutions forward to memic a real coast. This method gives me a much easier to read contact pattern without smearing of GM marking compound.

If the contact pattern (2) is towards the face (crown, top) of
the ring gear teeth then the pinion is too far away from
the ring gear (see picture below). To correct the pattern the pinion needs to
be moved towards the ring gear (increase pinion shim thckness) so that it is positioned closer to the ring gear centerline (1)



If the contact pattern (2) is towards the flank (root,bottom)
of the ring gear teeth then the pinion is too close to the
ring gear (see picture below). To correct the pattern the pinion needs to be
moved away from the ring gear (decrease pinion shim thickness) so that it is positioned farther away from the ring gear centerline (1).


Move pinion shim a large amount to begin with .010" so change can be easily seen. You will usually have to fine tune in smaller incraments to get contact centered. Once contact pattern is centered by adding or subtracting pinion shims then set the backlash for a more centered heal to toe contact but stay within backlash specs.