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I've owned this truck for a number of years, but this is the first year driving it as I was slowly replacing worn out parts. When the hubs are locked and the transfer case in 4 Hi or 4 Lo, it makes a clunking noise. Almost like the front drive shaft is rotating and hitting something. However, looking at the clearance around the drive shaft, I don't see how this would be possible. It makes the noise going straight and when making a turn. If I unlock the hubs, but keep the transfer case in 4 WD or 2 WD the noise goes away. Bad transfer case?
New recently replaced parts: front axle joints, drive shaft U-joints, tie rods, upper and lower ball joints, mile marker hubs, wheel bearings, brakes (calipers, pads, rotors, lines).
The good news is you've ruled out trans related issues out (e.g. spline teeth on the output gear). It could well be the transfer case, but that Borg Warner unit is known for being pretty stout, so you'll have to get it up on a lift and "exercise" the possibilities (e.g cardian assembly to transfer case)...............the actual R&R of the 1356 should only be about a 3 hr job if it's bad...............
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