Greg409,

Yeah - that is a good point about stress points and seals. I'm hoping the sintered aluminum in the fluid goes away after this fix. I could kick myself for listening to the guy at the garage saying to install tranny first and then the xfer case. It's darn near impossible to do that t-case on a lift with the engine/trans at an angle. Also, I think the tabs on the disco and the rover transmissions didn't line up correctly.

Hopefully, if the unit fails, it goes slowly... So far I've flushed the case 3 times. We'll flush it again in a week.

In engines I've heard not to worry as much non-ferrous metal in the fluid -- it won't cut into gears, chains, and other components with greater hardness. The particle size looks smaller than the fliter mesh but big enough to be a suspended abrasive - yeah, it does make a great sanding method for seals and other parts. I should have stuck with the $1.79/qt fluid instead of using $7.12/qt synthetic.