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So I swapped my M5OD-R2 for a ZF. The ZF was from a 1991 f-350 with a 5.8. It went into my 1993 4.9l. I have a speed sensor on the rear end and therefore do not need the speedometer gear in the tranny, but there wasn't one there when I bought it.
Had it rebuilt. My tranny guy stuck a used one in there but only (half?) of it? It leaks transmission fluid from the small hole inside the part he put in it. Well I'd like to plug it with silicone or something but don't know if it requires venting of some sort.
As far as I know, all gear boxes need venting: transmissions, transfer cases, axles. As they heat and cool the air inside (and the fluid to a smaller extent) expands and contracts. Without a vent they'll blow their seals.
But the vent should be in the top of the case. It sounds like you are talking about the tailshaft. You wouldn't want a vent down where the fluid is, it'll leak fluid.
Anything inside a casting or whatever that has internal moving parts, (auto or manual trannies, axles, transfer cases to name a few all require venting.