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Yea, that'd be a transfer case, but it's still split in two!
Any clue how it happened? Were you rolling down the high way with your hubs locked in??
I have weird feeling that they won't pay for it, sounds like people have a hard enough time getting them to cover stuff under warranty, I'm sure they'll find a reason not to cover this.
The 5/100 warranty is on the engine, the rest of the drivetrain expired at 36K. I doubt if Ford will have any interest in helping with anything, especially with a suspension lift and 35's.
The hubs being locked/unlocked is irrelevant, unless 530 decided to see what would happen if he driopped it into 4lo at 80mph. I would guess it was an internal failure of some sort, and the aluminum case split before it had a chance to toss the chain.
YEOWCH!!! Musta made a cool noise when it let go! Sorry man, that really stinks. Have you had probs. with the 4wd in the past? I hope you didn't wreck anything else when it broke!!!