What rob said, except that on my 87 the inner shaft is the one that has the "nipple" on it and there is a recess on the end of the outer shaft that it rides in. This is what keep everything lined up so that it will shift smoothly. (collar will slide)
Some people put grease in the CAD unit because they think that the lube from the differential never makes it that far. But it does. And the grease makes it hard to shift when its cold out. I would clean all of the grease out of there, cause it will mix with your gear oil which isn't a good thing.
The TJ axle shaft mod replaces the 2 piece system with a single long axle shaft. I did this to mine. If you are considering this mod, get the shafts for both sides since they run a bigger u-joint than that of a stock shaft. But, its expensive, mainly because you have to get a balanced front driveshaft, or have yours balanced.
My front driveshaft slip yoke was wore, so I just went with a new Tom Woods shaft.
'87 YJ, 4.2L built and bored, 8" of lift, 8.8 rear, AX15/NP 231J, Tom Woods drive shafts, Flat fenders, 12,000LB winch, Custom bumpers, Rattle can paint job. Never completed...