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Well, that's a bit less than with an OEM gearbox and arm, but if it is indexed properly, and you have the nut fully engaged and at specified torque, it should not be a problem.
 

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Yes. It is torqued down but the nut is not up to the sector
If by that you mean you have applied specified torque but the nut is NOT up against the shoulder on the spline, that's good. It would not be possible to tighten properly if the nut hit the shoulder.
 
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