Just tore down and cleaned up my 70 B-body 8 3/4 rear. The housing has this terrible welding on it, yet the inside is as it should be. Looks like the flange washed out and it was built up with terrible weld. Factory???

I’d run it.

Should be strong enough just not a beauty pageant winner on that side. If you can't live with it you could always weld on more on top of it and file it out so it looks better, but you'd have some time into it. Even lead solder would work to hide it also so long as the high spots were taken down enough first so that it could be filed out nice and smooth.

All that welding on one side would get me concerned how straight the housing is if the ends have not been recently replaced using a bar/jig set-up, other than that, I'd also run it
, but I would remain curious why the weld in the first place.
Which side?

is that weld or some kind of sealer in the first pic? if it's weld they either didn't have the gas on or it was REALLY dirty. I'd at least grind that mess off. Re-weld if you like. The weld in the second pic looks much better as does the weld outside the circled area.
have you cleaned and looked at the backside with a good mirror? Strange area for a weld

Slag from stick welding was my guess.
The fact it was only partially removed is not a good indicator of proper welding habits.

Have you checked the inside with a mirror or a pic with your phone?

I used a borescope to look inside this morning. There is a fine crack that follows this red line.

i wonder if someone in the past couldn't get the center section to come loose from the housing, so they just wailed away with a hammer and chisel until the gasket finally let go, or they discovered you need to remove the axles first ?

I'd try to find another housing if your restoring or planning on driving it hard. Probably be OK for a cruiser. IF you decide on using it I'd definitely grind that mess out and have someone that knows how to weld go over it.

Thats factory, I've seen plenty like that. That's where the fine leak comes from you can never seem to find. nothing wrong with the factory sending it out like that.

Interesting. It didn’t appear to have been apart before, which is why i asked if it could have been factory. Retaining clips were still holding the backing plates on, so assumed axles had not been pulled.

If it didn't leak before taking it apart don't fix what ain't broke
Don't worry, Be Happy
No one but you and those seeing this post will know or care about it

Yes definitely wouldn't leave a puddle. Maybe drip every one in a blue moon.

Put it in a room that is pitch black and stick a flashlight inside it facing up from the backside and look for any porosity spots along the welded area..