Everything that you have told us indicates that there is nothing wrong in the rear end.
If you do not have the hydro filled, running, and the air bled out, you WILL be able to turn the wheels because there is no back pressure in the hydro.
My contribution to this thread is hereby ended until you put it back together, fill it and put it "in gear"
There is no way you can see the gears turning under power with the rear cover and fluid installed
Jerry- Terry said he changed the oil and then removed the top cover to see the gears.
Terry- Ring gear/carrier turning will turn a least one axle unless the spider gears are missing or the splines are stripped off the axles, both are unlikely. Turning one axle and the other rotating opposite tells me the spider gears and splines are ok. Have you tried driving this thing yet or is it still on stands? You can't upload a video here, you have to load it to something like youtube and then you can link to it. I think you are looking for problems where there are none, these rear ends were designed for the Farmall Cub and in a garden tractor they last forever with minimal care. Only the pullers manage to break them.