Yah, bearing rollers and part of the cage it looks like. Open it up, if the gears and shafts aren't damaged you can rebuild it.

 

This is a 99 disco 11......I'll reach up and see if I have the nut to turn for a cdl. I honestly keep forgetting to look. I bought this a few months ago to pull a boat. The t-case had no apparent leaks. When I went to take out the t-case fill plug (when doing all the oils) it was so tight I had to shake the whole ride to get it out. Plug was twisted and mangled so I'm sure it had many attempt's to get it out without success. When I got the drain plug out , after the fill plug , I found about a half liter of black sludge. I have since filled and drained four times to keep removing remnants. Each time it comes out shiny black with a zillion metal dust shavings. What's crazy is it rides fine with no noise and no shakes or vibration since I've "washed" it out with gear oil and re-lubed all the fittings. Put in full synthetic with lucas oil stabilizer. I also pulled my 19 ft. boat all around this past weekend with NO noise or issues other than the pesty leaks! Disco Mike has suggested that the flange gets a groove and leaks so going to do that next as it looks to me most of the leakage is coming from the very bottom of the flange after the new seal replacement and de-greasing. I'll also pull out the bearing and repalce that. I obviously could see the bearing when I did the flange and it looked , at least what I could see, that it was all there but again i could only see the front of it . I know there is also a bearing in the t-case REAR output shaft too right? I do not see any leaks coming from the rear anywhere near or around the brake drum. I did find two plastic tubes that were just hanging down from that area and were singed closed from the the exhaust pipe. Are these the breather tubes and should they have a one way valve on them or just be open? If the t-case goes at least I'll have some new parts for the trade-out. The big gears looked good to me but who knows. I did notice there is a white plastic ring in the lower middle of the t-case that you look right up at from beneath. I'm wondering if that is the cdl ring? And it's ground down to nothing??? The grove certainly looks like the right size that could have had this bearing race go into it but I'm no t-case expert! I don't know the in's and out's of the t-case so I'm just guessing.
Oh and I'm just outside Denver in Parker....

 

Your t/case is a CDL unit. Only buy a used 99, 000 or an 01 since the older ones are slightly different in internal design, although they will fit you are better off with a newer more recent design.
If you need help finding a good guaranteed use one let me know. Also might as well find a D1 shifter so you can use all that extra traction with the CDL.