Kevin,
You may not have to accept that leak at the rear of your transfer case. Just because the shaft doesn't extend into the case as far as it used to, it still shouldn't leak. There is a seal at the rear of the case. It's easy to change.
I discovered mine leaking when I was under the truck for something else. It initially appeared that the leak was coming from one of the case split joints, but careful inspection revealed that the rear seal was the culprit. Fluid was running down the tailshaft housing to the more forward location where it was dripping off the transfer case. My case is a 241HD.
I changed the rear seal. The job was very simple and can be done with a punch or chisel and hammer. The first step is to drain the fluid. Even if you do drain the transfer case, some fluid will still run out the tail when the driveshaft is removed. While the fluid is draining, remove the rear driveshaft. Remove the four small (8mm wrench) bolts from the u-joint at the axle. Pry or otherwise loosen the u-joint. Wrap the joint with tape to keep the bearing caps installed. Pull the shaft from the case, and be prepared for fluid on your floor. Use a pan or rag to avoid my mistake.
There was a black neoprene dust cover at the very back. Beneath that was the actual seal. The dust cover just pulls off, but you have to pull fairly hard. The way to remove the seal is to bend it in along one edge so that it kinks. This will remove the pressure around the circumference and allow you to pull it out fairly easily. You may need to do some prying with a screwdriver or similar tool.
I tried that method, but I was trying to bend it at the wrong place. Study the seal. The edge of the seal extends all the way to the edge of the case. Since I didn’t realize this until later, the way I removed my seal was to drive a hole in it with a punch. Then I screwed a screw into the hole and pried on the screw with a claw hammer.
The new seal is a one-piece unit, incorporating both the seal and the dust cover. I don’t know which of these is the part number because both numbers were shown on my receipt. First number: 5086054. Second number: 21060012. It’s an expensive seal. Retail is about $40.
To install the seal, locate the drain hole in the dust cover part of the seal and position that at the bottom. Grease up the outer ring and the inner sealing surface and push the seal into the housing as far as you can by hand. Mine would go in almost halfway. Using a block of wood and a hammer, drive the seal until it’s snug all the way around. Install the drive shaft, REFILL THE TRANSFER CASE (about 3 quarts of ATF), and you are done. I put a note over the speedometer panel to remind myself to fill the case.
I’ve driven about 100 miles since I did mine, and so far it's not leaking again.
Good luck.
Loren
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