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Here's a weird one:
A couple of weeks ago, my speedometer started reading about 10mph low. Speedo cable was replaced in March, so I was pretty sure that wasn't the problem. Then it went to fluctuating 10-20 mph low, then to not working at all. The odometer kept working, but seemed to be turning slower than normal. Pulled the guage cluster out and had gear lube coming out of the speedo cable! Pulled the speedo apart and cleaned up what I could. Pulled the cable out of the t-case and cleaned it up also. Speedo gear seems intact. What would cause the t-case to push lube up the cable? Anyone else ever seen this problem? Are there supposed to be seals in the cable to stop this from happening? After re-assembly, speedo still reads 10 mph to slow, and odo is running 2/10ths to slow.
Q : do T-cases even have air vents like an axle housing does ?
My 205 has one on the rear output cover, not far from the speedo hole but facing straigh up, almost rubbing the body crossmember. I had it clogged a couple years ago and started pushing fluid past the seals. I couldn't get to it to clean it out so I pulled my fill plug and put compressed air to the t-case. I blew out all the dried mud and crap and then was good to go. You might give this a try just to be sure.
Thanks guys! The vent cap was completely gummed up with sludge so it couldn't vent. I think that will solve that issue. Now I just have to get the speedo working right again.
Did you replace the entire cable, or just the inners? If I remeber right, The inner cable is spiraled to keep fluid down. If installed backwards, cable will "wind" oil up housing.
With cable being serviced in March, could very well be the problem. Good Luck