I have found a LSD diff to suit Series 1 - 3 in my local trading post for $150aus. I thought these are really rare and normally cost a bundle so how can i tell if it is really a LSD and how worn it is assuming it is not currently in a car??

 

turn one wheel and the other one should turn the same way. Also the one I just bought from a GSL-SE had a sticker on the back of it that says something about using LSD compatible oil in the differential. A small yellow sticker, don't know if they all have this though?

 

If it's not in a car, turning one wheel won't exactly work. Plus, if the car is in neutral, the wheels turn the same, and if the car is in gear, the wheels should turn opposite (works with a VC LSD, anyway).

Since this LSD is not in a car, you may try a similar test, just turning the drive on each side. There must be some way to repeat it.

 

Just hold the input shaft still while testing.