Fenderman wrote:The trem is a little slack but not that bad
Any slack is bad.
All movement of the tremolo arm should be translated into noise-free movement of the bridge-block and saddles, with no play of any sort. Play causes clunks and squeaks which reproduce through the amplifier.
It's an age-old problem with the Fender design. Original designs by Bigsby and Burns have never suffered from it (when properly adjusted). Unfortunately, there is no adjustment possible with the Fender. You'd have to remove the slack by either replacing the block or by somehow "filling" the thread. There are several ways to do that. You could try wrapping cotton thread around the thread of the tremolo arm before re-inserting it (sorry about the dual meaning of "thread"). Or perhaps PTFE plumbers' tape in the same way.
A semi-permanent repair without replacing the block is to fill the socket as far as possible with Araldite, let it go off (harden), then drill the socket with a 4mm drill and then tap the hole to suit the thread of your tremolo arm (take the arm to a hardware shop, size up the thread and buy a tap of that size).
It works very well. I did it to a Strat in 1985 and it's still wearing well. Clearly, Araldite (a 2-pack epoxy resin which will have compatible competitors using other trade names) is better for the job than low-grade steel or alloy.