The picture was off the internet, and is a Spicer hub.
I have the same hub on a 1978 K20.
It has been a long time since I have been inside the hub, but I sure don't remember having two snap-ring grooves on the axle.
The only way I can think of that would prove that the groove you are using is wrong would be to turn the dial to unlock. Then see if it actually did unlock.
If it will not unlock you know you are in the wrong groove OR the plastic cam is worn out.
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