Hi:
Without being there, I would guess that you either have a bad output bearing in the transfer case, or pinion bearing. Also, there is a retaining clip that holds the output bearing in place in the tailshaft of the transfer that may have broken allowing the bearing to make some strange sounds. Check if there is any play (up and down / side to side / in and out) where the drive shaft connects to the differential and where the yoke goes into the transfer case. Let me know what you find.
Joe
Sunday, December 7th, 2008 AT 7:15 PM