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I have a 400ex and the rear axel slides side to side but doesn't seem to have up and down play, would bearings cause that or what would cause it?
No. Your picture shows it the right way. All but one part. There should be more threads showing toward the brake rotor hub. So the nut wasnt tightened before they tightened the jam nut. Loosen the jam nut and turn the hex part of the other nut until it tightens the threaded sleeve to the brake rotor. Then tighten the jam nut. Remember loctite or it will loosen up on you all the time.So should the rounded part of the bigger nut be against the rotor and the jam nut against the hex side closer to the wheel?