Oil likely started leaking because your breather is plugged solid. Differential heats up when you're driving, pressure inside goes up unless your breather is working to relieve it, then gear oil gets pushed out through the weakest seal. Check out the breather... it sticks out approx 3/4" on the top side of your differential. When the gear lube leaked out (only one way for the lube to get out and that's through your sealed bearing), it has likely washed all the grease out of your bearing, leading to the noise.
Replace the breather with a threaded nipple, hose, and small inline filter run up to behind your gas filler door (Search for "extend differential breather". Lots of threads on here), replace your bearing and oil seal, and you should be good to go. Lots of threads here on bearing and seal replacements too.