To answer for others that may search. Yes it does come out and should always be pulled out of the driverside, gently and slowly to minimize the risk of hurting the lube dam. Most likely the differential end of the output shaft circlip was catching on the lube dam, causing it to be held up. If you run into this issue you should pull the passenger side axle, diff housing and diff. Then goop the clip in a centered position and slide the output shaft out of the driverside.