That shouldn't leak there just from loosening the lock nut. There isn't much pressure there depending on where the end seal sits. With that much play though, the pinion gear should be skipping over the teeth on the rack and there should be horrendous fluid leakage from the boots.
What I would suggest is removing the lock nut, then remove the adjuster completely, (mark it and count the number of turns), then check to see if that spring is broken. From my limited experience watching students take these apart, I'm more inclined to think you're going to find the rack pad is broken. It is usually made from nylon. Its purpose is not to set the amount of play, because there should be no play, it is to set how hard the rack is to move back and forth.
If you find the spring or pad broken, I'd head to the nearest pick-your-own-parts salvage yard to find those parts in a similar rack. There's only a few manufacturers so you might find the same parts in a different brand of car.
Friday, April 15th, 2011 AT 7:27 PM