Rocket Rob was correct with his assessment of the CV joint being the culprit. What you've posted is a photo of the rear axle half shaft, which incorporates the CV joint, and the shaft coupler. That solves the mystery, there are no "Gimbal" bearings associated with this assembly.
As for drag radials being considered a "modification" and the reason for GM denying warranty coverage - I hate to say this but they are probably on solid ground from a legal standpoint. Believe me, I have no sympathy for GM as I firmly believe that they put profit far above customer satisfaction / support and have little, if any, consideration for owners of their products. "Good Will" is not a phrase that appears often in their vocabulary. However, in this case, the addition of drag radials does increase the traction substantially, and, subsequently, the load placed on the driveline. They will argue that the increased load is beyond what the car was designed to handle in stock form and, as such, that is what caused the failure. Whether or not that was the actual cause is likely irrelevant. The fact that the drag radials constituted a "modification" is probably enough for GM to succeed in a small claims action.
I know that's not what you wanted to hear but it is, in my opinion, the likely outcome.