It does sound like the transfer case - louder in top than the other gears because it is turning faster in these gears, and other noise is less.
These transfer cases always seem to produce some noise, although the first question of course is "Is there any oil in it?" It is most,likely that the noise could be reduced by replacing the bearings and if necessary the shaft on the interemediate gear in the transfer case - this can be done without removing the box, and possibly checking the preload on the output shaft bearings. However, unless the noise is excessive due to lack of oil it is unlikely that continuing to run it will create any problems other than noise. For your peace of mind, and to learn more about it, you may find it worthwhile to drain the oil from the transfer case and remove the bottom (sloping) cover plate to have a look at the works and check for any problems - one I have run across is a broken thrust washer on the intermediate gear, part of which then passed through the gears, to their detriment.
John
John
JDNSW
1986 110 County 3.9 diesel
1970 2a 109 2.25 petrol
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