Yep, that's your problem. There is supposed to be a keeper on that shaft keeping the flange in position right up against the side of the diff, but the pulling stress of the front level/lift may have put enough stress on it such that the keeper couldn't hold it in position any more. You probably have a damaged seal now as well, hence the leak. You need to get that stub shaft the rest of the way out, install a new oil seal, inspect the end of the stub shaft where the keeper sits and make sure it looks intact. You could also replace the front diff with a junkyard unit as long as you have the axle ratio from the code listed on the label in the glove box. If you post a picture of that label here, we can tell you what you need but I'm 99.99% sure you have a 3.42 ratio since it's a Denali. If you replace the diff, it needs to be an AWD unit from a Denali or Escalade unless you want to make some modifications to it. Not a hard job to swap it out but a cheap Harbor Fright transmission jack will make it easier.