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I have a NOS ring and pinion set and the pinion has rust damage from poor storage. Is this pinion OK to use? Can it be cleaned, or needs repair, , or is it garbage?? I tend to think the bearings are pressed on so it may not be a big factor but I don't know.

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Depends on the seriousness of the pitting. Large pits can lead to stress risers that lead to early failure. If they are quite small I would bead blast the pitted area and then prime it with a Glyptal type primer and use it. Larger pits could have their rough edges smoothed out and the same Glyptal type primer. A lot will also depend on how hard you intend to run the gears.