You might need to remove the speedo output gear first. I'm not sure but the first time the WSM says to remove the tailshaft housing comes after it says to remove the speedo gear. But I am not so sure that pulling that housing off is necessary. In your photo you can see the last 1/2 inch of the output shaft and it looks OK. I , like other are still puzzled about what you see that causes your concern here.Pleas explain