Door latch assembly installation
 

I am trying to determine the proper way the interior door lock arm is installed with the retaining clip. I have tried to install what I thought was correct but the interior lock arm just binds up when pulling up or down, and the exterior key lock does not work. Any insight would be greatly appreciated.

You have the clip on backwards. The clip puts pressure on the bend to keep it from rattling

Great I will move the clips around and give that a shot. Thanks for the photo.