Ok so Ive been doing a lot of research and can't seem to find anyone taking about my particular issue.
The rear driveshaft (prop shaft) is apparently leaking grease which is spraying onto the exhaust. There is a well defined ring of grease (it's thick, not oily) running across the under-carriage of the vehicle where the drive-shaft meets the transfer case (see photos). Oddly however it appears the transfer case itself is leaking fluid (very thin / oil - not grease) in the same general area. Does anyone have any thoughts as to whether these two leaks are related and how difficult it is to repair the drive shaft.

I would ignore the problem, but after replacing the transfer case oil with Royal Purple Syncromax a few weeks ago, I am now 100ml low and the grease from the drive shaft is burning off on my exhaust. Also I feel a slight shutter especially on deceleration.

My main questions:
1.) Would a bad drive shaft cause the transfer case to leak?
2.) Is the grease spray sign of a bad driveshaft?

Notice the shaft offset to one side.

Notice the grease spray above the shaft

Notice the grease spray above the shaft against the underside of the vehicle.

 

 

Great. I ordered a drive shaft and will replace. I will be sure to post my results in the coming weeks.

 

I've the same issue on my 15 LR4, seems easy enough to do, how'd you make out?