I also want to add, I don’t think it’s just an electrical plastic burning. Say this because the odor made my girlfriend and I really sick. Therefore, I’m concluding there is some kind of chemical involved. Maybe an oil leak?

 

Another prime candidate is leaking valve cover gaskets which is very common, drips oil down on to the engine and gives a burning oil smell. Easy fix, usually just needs a pcv valve mod and tighten the bolts on the valve cover gasket.

 

This seems like a possible culprit.If the smell dissipates when you switch to Recirculate, we have a massive clue. This confirms that the odor is being pulled in from outside the cabin (the engine bay or undercarriage) through the fresh air intake cowl at the base of your windshield.

Since it happens while moving and "disappears" when you seal off the outside air, here is the narrowed-down list of culprits:

1. The "Transfer Case Oil onto Exhaust" Theory (Most Likely)

This is a classic Discovery 2 issue. The front output shaft seal of the transfer case sits directly above the hot exhaust Y-pipe.

Gear Oil on Exhaust (Sulfer/Additives)

If you have a leak from the transfer case or the rear of the engine, oil may be dripping onto the hot catalytic converters.

• The Cause: Heavy-duty gear oil (75W-90) has a very distinct, pungent chemical smell when it burns—often described as "acrid" or "synthetic glue."
  
• The Sickness: While less toxic than exhaust, concentrated oil smoke in a small cabin can quickly lead to nausea.
  
• Check: Look under the truck for "wet" spots on the Y-pipe or catalytic converters.