I noticed my torque arm bushing where it connects to the trans, on the torque arm itself I can see maby 1/2 inch of area where the torque arm was sliding (cuz the dust was removed, and that area was darkers then the rest of the torque arm). Is it suppose to do this? Should I tighten it up?

as the rear axle goes up and down both the driveshaft and the torque arm move in and out relative to the tranny

how much they move i'm not really sure of

thanks, wasnt sure.