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The giant output shaft housing is a dead give away for a NP 203 case.
I believe that I see locking hubs under your ride, and this would tell me that you have a 203 with a part tim conversion.
Does it actually have 2wd?
If yes, make sure you engage the hubs, or engage 4wd every feww hundred miles to keep the case lubricated.
yes it does have 2wd cause when in hi not hi loc the front drive shaft spins free and i just drove it today with the hubs unlocked but in hi loc and had a jinjle to it. bad cardigan u joint.
Well actually the shifter is not telling you the truth anymore. If the 203 has been upgraded, you no longer have a "LOC" position, since the whole purpose behind the part time conversion is to lockk up the center differential all of the time.
There are two shift levers on the case, one is for two wheel and four wheel operation, and the other side operates the range boxm for high and low ranges. Yes it is possible to engage 2wd low range at this point. Just need to modify the shifter.
As for your noise, this could be a number of things. First check the driveshaft for obvious problems, then you will have to check to see if the noise is coming from the case or not.
I mentioned driving with the front hubs engaged once in a while, many 203 owners fail to do so and starve the reservoir of oil, and run things dry.. This will not lube the chain any longer, nor will it lube many internal bearings, and the case will be damaged.
I am not suggesting this is the case, only bringing you up to speed on some of the potential problems associated with the 203 case.
ok well one of the u joints at the transfercase is bad in the front driveline. i am familiar with the 205 never had a 203. i understand the operation of them though.