Most likely Steve25's #1 is the issue. It's extremely difficult to crush that collar, especially with the axle out of the car. In that situation, I use a torque multiplier to get enough force on that nut to crush the collar. With new bearings and the center section removed, 30 inch lbs. rotational torque is correct, no more than 35 in lbs. It takes 250-275 ft. lbs to crush the sleeve and begin to apply preload. They don't give a spec. for rotational torque with the unit assembled, so to really do it right, the center section and axle shafts should be pulled out. Damage is unknown. May be fine once assembled correctly. A visual inspection and a pattern check should show any issues.
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