The bearing wears into the shaft and/or thrust washer which increases mainshaft endplay. When this happens, the transfer case input ball bearing is also supporting the transmission mainshaft which it can’t do for long without failing itself. At that point, anything can happen and it won’t be cheap to fix.
May 25, 2017 · The plugs can be removed and inspected, fluid levels can checked, additional fluid can be added, and then the plugs can be replaced and tightened. If your transfer case continues to leak, the fluid will need to be drained so that mechanics can check for seal failures and possible damage to the case joints.