Transfer Case Leaks

My transfer case on my 4x4 97 s10 blazer leaks out of the back. The fluid seems to come from around the rear output seal, where the driveshaft comes out. I have replaced the seal twice, and it still leaks the same. I have no idea what could be the problem, anyone have any ideas?

Is there any kind of wear on the driveshaft yoke where it passes through the seal when you slide it in? Maybe a groove worn into it where the seal rides? How much play is there in the shaft when it is slid into the rear of the trans? Can you grab it and move it up and down/ side to side a lot?
If the part that slides into the trans is worn or grooved you can maybe find a good one at a junk yard, or look through the phone book for a place that builds drive shafts, they can get you a new yoke often cheaper than the dealer. Also how are the U-joints? if the shft has excessive vibration from bad joints..or being out of balance it will ruin a new seal quickly.
If you find there is a lot of movement up/down/side to side, perhaps a bearing in the tail of the transfer case is worn.

Good luck

Zeeb

Acording to my tranny guy, seals don't just start leaking for no reason. He gave me all sotrs of possible problems like those Zeeb has already covered, then discovered that the pan gasket had sprung a leak, so I wound up with only a bill for routine service. This was a 700-R-4 on an '84 K5 blazer, but the transfer case may have similar issues. Good luck. CB

Thanks for the ideas, i'm still not sure what i am going to do, becuz it leaks between the seal and the transfer case itself, not around the shaft and there are no signs of spraying under the vehicle, but i guess i am going to try another seal with some silicone on the outside or something to that affect to try and get a better seal around the opening. It might be that the transfer case itself has a nick in it or something. Thank you both