Passenger side axle seal leak. Pulled it apart and the seal looked ok, axle is not bent and bearing is good. The vent is also not clogged. There is a slight groove in the axle, I can barely grab it with my fingernail. What do you all think? I'd rather not drop $400 on a new axle if I can help it.....

 

After driving in a quicksand-filled river a couple times I had similar grooves on my front axles that leaked. the two shafts machined (Chromoly, so especially didn't want to replace), replaced the seals, and when reinstalling removed the outer felt pads (from the EVO sleeve kit) that had trapped the sand in the shaft causing the damage. Also, at the recommendation of the machinist who turned the shafts (decades-long off-roader) filled the couple of inches of the axle tube just outside the seals with marine grease to discourage further muck build-up in the axle tubes. Haven't had a problem since, and that was probably 75-100K miles ago.

Edit: And since videos are more fun than word, shere's a video of one of those river trips, LOL ...

https://www.youtube.com/watch?v=KyDIT0-98FI

 

I've had good luck with those speedi sleeves.

My axles looked similar to the one in your photo. It's hard to tell how deep your axle groove is, though.
On mine, I cleaned them up with some emery cloth and reinstalled them as is, (they were removed for a ball joint change at 76,000 miles). No leaks yet at 106,000 miles.
I keep enough oil in the axles to ensure the seals stay wet.