I have a bit of side to side play in my turbo, but the only time that i think it hits is when I let off the fuel suddenly from higher rpm and so it barks. I don't let it bark very often. Should I rebuild the turbo or with the barking have I ruined the turbo.

 

A bit of side to side play is normal, these Holsets run on journal bearings instead of a ball bearing, just a brass bushing that floats on oil. As long as the wheels can't contact their housing while checking side play its probably fine. In-out play on shaft is not good.

The bark you hear isn't a mechanical clearance issue, just air surging through the turbo as it tries to slow down. I'm sure someone can explain exactly how that happens.

 

Yep, the bearings are likely fine as gorms said unless the compressor wheel is contacting the housing. The bearings aren't tight unless there is pressurized oil on them.

The barking really only happens if you are running hard and let off the throttle quickly. Try to ease off the throttle. What happens is that the boost pressure has nowhere to go since the engine no lnger needs it. The excess air pressure has to equalize somehow, and the only other way it can is back the way it came from. So the air flow in this case goes back across the turbo's compressor wheel, the only other way it can. This creates turbulence around the compressor, and the noise you hear (the barking)