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Does anyone know how to reduce this drag?

On a Torqueflight.....No, pretty much is what it is. You could go the super lightweight internals route and all roller bearing, which will help, but a 3 speed Chrysler trans has significant drag.

On guys talking about the car pushing VERY hard.....the reason is, your rear housing is bent. Because it is factory does NOT mean it isn't bent.......as a matter of fact, that pretty much guarantees that it IS bent. Never, repeat NEVER seen a factory housing that was anywhere near straight enough for a race car application. And if you have an 8.75 under something with just average power and it hooks..........you better have significant bracing on the housing, because it WILL bend very easily

Monte