I get what y'all are saying and your feedback is the reason I posted this. Yes the drive wheels need to rotate at different speeds in the corners hence the need for a differential. You're saying put a bearing inside the hub so it rotates freely around the axle, get rid of they key and the set screw, and leave the rest of my setup alone? I just tried moving the bike a few feet around the garage and it does turn albeit with a huge turning radius.
Here's my wheel hub setup.