Recently had an issue with a squeak coming from somewhere. Replaced the front brakes, and it wasn't the cause. Dropped the driveshaft today, U-Joints are fine. I grabbed ahold of the output shaft on the transfer case and turned it with a pair of channel locks. The squeal is coming from the T-case in a forward motion. Any ideas what it is? I checked the fluid and it looks kinda crappy and it smells to high heaven. So I'm going to have that flushed out and replaced with new. Would this fix the issue? Or do I have underlying problems that caused the fluid to go bad?

 

It is probably the factory installed fluid and it may have seen some extra 4x4 use in wet or muddy areas and got a little water in there. You should be fine with new fluid change. Pull the drain plug and drain. Put the plug in and then pull the fill plug and fill it up again.