Call the mfg, they should be able to help diagnose. When I had issues with my ARB their tech support was the best....very knowledgeable, and all wheelers. Hopefully Detroit is similar with their support.
Most you describe, except for the squealing tires, sounds normal to the function of a mechanical locker. Do the tires squeal when starting out under all conditions (straight, turns, little throttle, heavy throttle)? Have you taken it off pavement and done some slow hard turns to see how the locker performs? Inner wheel should turn faster, and should stay locked on low traction surfaces.