I noticed drips coming off the bottom of my drivers side steering knuckle. I figured it was the cv boot which I had installed 5 months ago, so I got another one from Autozone since it has a lifetime warranty. My mechanic took the old axle off & showed me a fluid trail coming from the front differential. He thinks the leak was coming from a bad seal which can be seen when looking in the axle housing. The seal was only $10 from the dealer.

Can this seal be installed by working through the axle housing, or would the differential have to be manipulated in order to install it?

Depending on the year? but most have to be done by removing the carrier assembly (i.e. straight axle front diff.)