I don't know if it is the same procedure for the D300 that you are working on, but here is an excerpt from the instructions that I used to replace the speedo gear in my NP231 that might explain why he was twisting the gear in the housing:
"You will notice that there are a series of numbers located along the side of the speedometer gear housing. After you loosely install the retainer and bolt, select the appropriate tooth gear range (the numbers on the side of the housing) you just installed and rotate it until it is aligned with the raised dot on the transfer case before you tighten up the bolt."
If you would like the whole writeup with pictures and everything, let me know your email and I'll get it to you as soon as I can. Again, its an install guide for the NP231, but it might shed some light on the overall procedure for you.
-JD
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