when i had my h165 lsd rebuilt i had everything done to it like all new bearings, gears lapped and balanced, all new seals and that took the noise away. it ended up costing me $600 aus$ but i had plenty of freight on it to get it to sydney from bathurst.
i took it to a local shop and they said that it was that bad that they had to send it to sydney to get it all lapped and balanced by some of the better guys/specialists
as for oils i use a 75-90 valvoline durablend in both me gearbox and open diff. but castrol lsx 90 in my lsd
hope this helps