Well you don't have the same hubs as me, so the procedure may be a bit different. But
generally speaking, with any wheel bearing, you need to adjust the tightness with the wheel off the ground. Tighten the spindle nut with a wrench but just to "barely snug." It's important to spin the hub as you tighten; otherwise you aren't getting the bearings snugged all the way in. Then, stop the spinning and
back the nut off to the first spot where the cotter pin can go in (yes, the nut will actually be loose). Some spindles use bendable tabs instead of cotter pins etc., but the idea is the same. When it's all done, you can probably grab hold of the tire and shake it, and
just barely feel a bit of play in the bearings. Any more than that is too much (too loose). If you don't feel even the slightest amount of play, you may need to back the nut off one more position. Wheel bearings expand under heat & load, so too tight is worse than too loose.
If you have hub lube leaking from the inside seal, you probably need to replace the seal. That could be another indication that your bearings have been too loose, which would cause your tires to drag down the road instead of rolling freely. Looking at all this from a different angle, it's possible that enough of your hub oil has leaked out that your bearings are ruined, and that in turn is causing the tire wear.
You just have to play detective a little with all this. If for any reason you have to replace a wheel bearing, be sure to replace the race (bearing cup) that goes with it too - each bearing has a race that it runs inside of, and the two of them wear in together. Replacing a bearing without replacing the race can cause the new bearing to fail prematurely. A race driver set can be a real handy thing to have, like this one (but they're available everywhere for about the same money):
http://www.harborfreight.com/10-piece-b ... 95853.html