I was removing the t case on my 2wd bronco project and drained it and got ATF out of it,is that what they are supposed to have now.

 

Yep. You can get "transfer case fluid" but it's just Mercon V.

 

I dont understand the use in ATF in trans and transfer cases,gear lube seemed to have worked better as I never had any issues with drivetrain parts with gear lube like now with ATF. I have some 5 speeds with issues and there seemed to be alot of slop in that transfercase.

 

I can't testify to using gear oil in a trans or transfer case as I've always used Merc V like the spec says. I can see how gear oil would have better lubricity and heat carrying capacity, but I doubt it would get into all the parts well enough compared to the much thinner ATF.