Yes, the light is supposed to come on when the clutch is depressed, but the test for a weak pump is not so much the light coming on as a CHANGE in steering effort between low idle and high idle. A lot of things can affect steering effort so comparing one tractor to another really does not tell you much. A change in steering effort between high and low indicates a loss of flow and/or pressure. This is usually a pump getting weak but can also be a leak between the MCV pump and the steering circuit or a sticking flow divider valve. Having the three GPM orifice come out can also cause steering problems but it usually is poor steering at higher RPMs caused by too much oil flow to the steering. Losing the orifice will also cause no flow to the oil cooler.
The important thing to keep in mind is that the steering gets the FIRST three gallons of flow from the pump. If there is not enough left after that you will not have enough flow through the oil cooler and then to lube the rear end.
706s do not have as many rear end failures as the newer and larger tractors, but the root cause of the failure is still the same, lack of lubrication. Running the oil level higher can help by having the ring gear run in oil so that it helps lubricate it but the main range transmission shaft, the reverse idler shaft, and the differential are all pressure lubricated with the excess flow from the MCV pump. If the MCV and flow divider valve is working properly, this flow stops when the steering gets all the oil as indicated by increased steering effort.
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