2003 Sorento banging at speed Help

I got this sorento from a friend and now after getting it running and installing the new front drive shaft I am having big problems. (The front drive shaft was not installed when I got the truck and she was having problems with the 4x4 previously. It is full time 4x4 or awd.)
After installing the drive shaft I noticed a noise right away. Sounded like rusty brake rotors from a vehicle sitting almost. At highway speed holly crap bang bang bang. I thought the drive shaft came off or something. It did not. I really wish that it did. At least I could fix that.
Even with the front drive shaft out I noticed that the front right side makes noise when hitting bumps or steering. Not a clicking cv axle noise. metal on metal but not all the time and not too bad at all.
The only thing I can see so far is that where the drivers side cv axle goes in the axle housing is a little looser than I would like to see. The front diff have fluid and I am about to check the transfer case. I am working on the ground trying to figure out the issue. Differential or transfer case? Any thoughts?

http://i118.photobucket.com/albums/o94/chrisorbicsebay/Kia3_zps9692b290.jpg
http://i118.photobucket.com/albums/o94/chrisorbicsebay/Kia2_zpse050857c.jpg
http://i118.photobucket.com/albums/o94/chrisorbicsebay/Kia1_zps4c02869f.jpg

It is a 2003 Kia Sorento full time 4x4 with 116,000

I found out that the transfer case fuse is number 13 under the dash. I am going to see if that makes any difference.

Have you checked the universal joints and the carrier bearing?

I have determined that the front differential is shot. When there is no load on the gears under deceleration the gears are skipping. Bearing must be shot. The transmission shop said the inside of the case could and most likely is damaged. The differential gets hot to the touch after about fifteen minutes of driving. Right now this truck is on the back burner. Not sure if I am going to fix the differential or sell it as is.

I called a junk yard and they wanted $400 for a differential. I think they said it was command track or something like that. I am not sure if mine is.

I have determined that the front differential is shot. When there is no load on the gears under deceleration the gears are skipping. Bearing must be shot. The transmission shop said the inside of the case could and most likely is damaged. The differential gets hot to the touch after about fifteen minutes of driving. Right now this truck is on the back burner. Not sure if I am going to fix the differential or sell it as is.

I called a junk yard and they wanted $400 for a differential. I think they said it was command track or something like that. I am not sure if mine is.
I would check 3 or 4 yards and then make a decision to sell as is or repair. I think you could install the differential your self.
I purchased a manual on ebay on a cd-rom for around $8,00. Check retail values on blue book for your vehicle.

It ended up being a bad transfer case.