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T-case output shaft play?

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I can move the rear yoke for the main driveshaft coming out the NP205 up and down very slightly. There is also a weeping seal. Is any play at all allowable, or does it mean something is worn out?



Should I remove the housing for the seal (5 bolts?) to install the seal, or is it just as easy to do with the housing on the transfer case?



Thanks,
 
I replaced my seal without pulling the housing off. I have a small amount of up and down play also. Its only been there for 60k miles or so. I plan on rebearing my transfer case when I remove the cab later on this summer.
 
The output shaft in the 205 rides on a Ball Bearing. Theres no way to put preload on the bearing so your going to have some movement.
 
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