Hello, couple of questions on my 04 XL transfer case, 107,000 miles new to me, as I took out plug to check level, air was sucking in around the threads like the case was sealed air tight, is there a vent that is plugged or is it sealed tight?
Next thing was that the fluid was muddy brown, smelled like atf but looked crappy brown. Didn't look foamy like water, what could cause that kind of breakdown in fluid in a transfer case, atf holds up better than that in transmission. I guess it's troubling if it's heat related, I'll put clean fluid in and see what happens.

 

It sounds like water contamination to me. Used to see this on a regular basis in the military vehicles we ran. No real foam just a muddy brown color.

Did your truck come from a farm or work that would run into water or mud?

 

The T-case would have to be vented. I'm guessing its like the axles and transmission, which have vent hoses going up to higher points on the body to keep water out. Yours is probably broken/missing/plugged.

 

The venting makes sense, probably plugged. Not sure what truck did before I got it.