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Weird clunk!!!!

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Hood Release Cable

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I just had a really nice rebuild done on my 727 transmission. Nice convertor (low stall) BIG DIFFERENCE. However, My 205 transfercase might be giving me trouble. When I let off the throttle quickly it sounds as if the transfer case is engaging. It clunks in but not all the way.

Is there some adjustment or is time for a new one.
 
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