Thread: Transfer Case Leak

The rear output shaft is leaking oil. Nothing new there but I have had an idea that the design is not very good. The transfer box oil level is above the level of the shaft. Nothing wrong with that as the oil seal should work to prevent leaks. But the spline will let oil run as far as the felt seal and the washer held by the large nyloc nut. To my way of thinking this felt seal will not stop oil seeping past the metal washer that is only tightened against another flat metal surface. I think that the washer should also have a sealing washer that is more substancial than what can be provided by the felt washer. Perhaps nylon. I have experience with another vehicle that has a similar situation where oil weeps along the spline and is stopped by silastic stuck over roll pin ends. So I think I will put thread seal on the nut (yep the nyloc should stop leaks but...) and then put a sealant between the washer and the nut and the metal surface. Any comments?

By the way mine is a low kilometre vehicle and the large nyloc nut was only finger tight. Rather surprised because all the other bolts on this vehicle have been done up by sumo wrestlers. Could have been attacked by a previous owner but there is nothing in the service book.