I have a 2004 5.4L V-8 with 4x4. The front axel on right side is leaking slightly where axel comes into the differential housing shaft area. I bought it new and notice fluid discoloration in the area but it never dripped for the first 25K. It still doesn't drip very often but I have a custom driveway and when it does I notice it even though it only happens around once every few months. Ford wants about $550 to replace the seal. Sounds like it is a big job.
I was thinking about changing the fluid as I now have 83K on it even though Ford says it is a lifetime thing. I don't think it is worth the $550 to change a seal that isn't leaking enough to hinder the operation especially since I never use 4WD.
Would anyone correct me from making a mistake? I told the fleet manager where I bought it that I wanted limited slip in both axels. He said OK and think that is what I got. But the owners manual doesn't recommend placing friction modifier in the front differential, only the back. Does that mean the front isn't limited slip with the clutches in it? And if I add the friction modifier anyway, can I install something to help swell up the grease seal to stop the leak?

 

I would not worry about the occaisional drip on the driveway as a little "Oil Eater" or "Purple Stuff" will clean it right up. $550.00 seems like a lot of money for a $2.00 seal but, it is a lot of work to replace. It all depends on how you feel about a minor leak and your driveway.
I would not try any of the "seal swelling" products unless Ford sells it.
I am not aware of Ford putting posi's in the front of any of their production trucks due to the possibility of safety issues. Almost anyone can drive a 4WD or A4WD, but a posi in the front axle can cause steering issues in adverse weather conditions like snow or ice. I think you should take your VIN to a different dealer and ask them to give you a "build sheet" for your truck. That will tell you everything that was installed at the factory.

 

Moto has actually helped me with this issue recently, I have a thread Ball Joint and Diff Repair only about 2 weeks old (the ball joint broke backing into a spot at work and it tore the axles from the front diff). With pics of my progress. Is the diff leaking from the end of the shaft tube near the flanges or from the other end of the axle tube where it's mounted to the diff with 4 bolts?

 

Yeah, I read your article a few days before I wrote this. Great pictures!
My problem is on the other side, or passenger side. The differential housing has the 4 bolts then extends a couple of feet longer in that direction with more housing. Then there is a seal there in the end of that portion where the housing ends. The rest looks like your picture of the shaft where parts are laying by your feet.

 

Here is what I had to do on my 2003 Expedition Eddie Bauer 4x4. My leak was exactly what you mentioned - about a teaspoon from the passenger side front axle where the flange is between the CV half shaft and the axle shaft coming from the differential.

Remove brake caliper and rotor. Remove anti lock brake sensor from knuckle. Remove dust cap and retaining nut from CV shaft. Remove steering knuckle. I tried to cheat by not removing the lower ball joint from the knuckle - just the upper ball joint & steering tie rod end. It is VERY difficult to get CV shaft out this way. It barely clears the knuckle. I just did not have a fork to separate lower ball joint. Remove 6 bolts on flange between CV shaft and axle shaft w/12mm 12pt socket. Remove CV half shaft. The axle shaft is held into the differential by a retaining clip/ circlip inside the differential. You can use a maul to beat the axle shaft out from the differential but the retaining clip will fall into the differential (requiring the removal of the diff cover). You may be able to reuse the clip if you can straighten it but its worth it to go to dealer for this low cost item as you do not want axle shaft to be loose in diff. While at dealer, you should also get the axle shaft seal. Mine cost $13 at dealer. I found out that Timken #3604 I got at parts store for $10 is not the right size. Remove 4 bolts from axle tube to diff and 1 bolt from axle tube to cross member. Remove axle tube from vehicle and use seal puller to remove bad seal. My seal would not come out with my seal puller. I had to chisel it out. The axle tube is very brittle and I chipped it a little. Replace seal, put axle shaft in tube, remount tube to diff and secure with retaining clip from inside diff. Replace everything else you removed to get to this point.

So after two full days of this adventure, I still have the same leak. Maybe even worse. I'm very disappointed and wish I'd not even bothered. The only thing I can think of that I did wrong was I should have lubed the rubber part of the seal with some wheel bearing grease before inserting the axle shaft. I also removed the vent tube form top of diff and blew compressed air through it to verify it was not clogged.

 

Wow, too bad the leak didn't stop. Well I filed a new post yesterday telling what happened to me as the bigger problem was driveline noise like an axel bearing going out on an older Ford. I took it to the shop and had two front hubs and the leaking seal on passenger side replaced. The good news is that the seal isn't leaking after about 400 miles so far. The bad news is that the driveline noise is still there but not as bad. Mechanic said it is the front dfifferentiall as you can hear noise coming from it as the axel are spinning when up in the air. Where the other axels in the back are quiet. The is a big job and not sure it is the main source of the noise. And I am at $750 and counting.