I put new gear oil in my transfer case about 3k miles ago (maybe less). Drained it today to do some work on the transfer case and it seems really thin. I don’t think it has water in it. The color is not right but I don’t think it’s just gear oil. The only thing I can think is that the seal between the transfer case and the transmission is letting gear oil into the case. Anyone had a similar issue? I am going to put the gear oil in a clear bottle and see if it separates itself. (P.s. I also had 2 bb sized chunks of metal on the magnet on the drain plug).

 

The oil may not separate. BB sized pieces doesn’t seem good to me. Not at all the same vehicle, but my Series 2A leaked transmission oil into the T-case so I suspect it’s possible on a D2.

 

The seal between the transmission shaft and transfer case is there to keep gear oil in the transfer case. I would suspect you would have to have a massive transmission fluid leak for it to end up in the transfer case. Also the mating surface between the two are metal on metal so you would see transmission fluid dripping from there first.

 

I’m planning on refilling it and just keeping an eye on it. It was a pain to drop the transfer case in my driveway and I would like to not have to do it again. Maybe I got some water in it. I haven’t done any water crossings but who knows. Snow? Pressure washer?