I got a new rear wheel and fitted my freewheel to it after I cleaned it up. Everything spins beautifully. But before I fitted the wheel on to the bike frame I thought I should tighten a nut on each side to the hub. These nuts came with the wheel in addition to the chrome outside tighteners. (The wheel is not quick release) Then I put the new wheel on and started to align it. Suddenly the hub is almost frozen. Wheel barely turns. Ouch. I removed those nuts which must have been for the outside of the bolt not meant to be snug to the hub. I checked the ball bearings and they were well greased. But still, as soon as I tighten the hub even finger tight the wheel no longer spins smoothly. Did I wreck the wheel?
clear close up pics of your wheel axle area, both sides might help.
Did you use a cone wrench when you decided to tighten the inner nut? If you did not completely disassemble the axle. it sounds like you loosened the cones, and when you are tightening the outer nuts you are spinning the cones tight also. You have to use a cone wrench to lock the cone to the skinny nut on each side once the bearings are snugged properly. Then they will not move when tightening the wheel to the frame.
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As PK and Nigel said you over tightened the cones. The process for adjustment is tighten the cones till there is no play when you push and pull the axle, and the wheel should still spin freely.
To lock the cones in place you hold the cone steady with a special thin cone wrench and turn the outer nut tight against the cone to lock it in place and keep the cone from spinning. This may take a few tries to get right.
The final test can be done with the bike upside down installing the wheel normally and grabbing the rim check for side to side play. Sometimes a readjustment is needed . Find the sweet spot where the wheel spins freely and does not have side to side play.
QR wheels have cones and lock nuts too, they just do not use the outer nut that locks the wheel in frame. Instead they use a skewer. Easier to steal.
Also you did leave a one bearing space in the hub, not cramming the bearings tight.
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