[shorod]

Per the 1998 Mountaineer service manual, installation is possible with the transfer case installed. Below are the steps pasted from the manual.

Installation:
1. CAUTION: The can (domed CV joint housing cover) is pressed into the CV joint housing at the factory. When housed incorrectly, the can will appear as shown in the cut-away illustration, top box. Do not reseat the can in the CV joint housing if the can's flange is above the CV joint housings shown in the cut-away illustration, bottom box. Install a new driveshaft.

Verify that the can flange is housed correctly in the CV joint housing as shown in the cut-away illustration, top box. Install an new driveshaft if the can flange is not hosed correctly.

2. CAUTION: Always connect the front driveshaft to the axle first. Otherwise the weight of the driveshaft can pinch the boot between the shaft and the boot can cause the boot to tear.

NOTE: Align the index marks. Install the driveshaft.

3. CAUTION: Tighten the bolts evenly in a cross pattern or damage will occur to the CV joint.

NOTE: Install new washers and bolts. If new bolts are not available, coat the threads of the original bolts with Threadlock and Sealer E0AZ-19554-AA or equivalent meeting Ford specification WSK-M2G351-A5.

Install the new washers and bolts. Tighten the bolts evenly in a cross pattern as shown.

4. Verify that the CV joint has seated squarely in the transfer case flange.
-Check that the space between the end of the CV joint cap and the end of the transfer case flange is equal from the top to the bottom of the two components.
-Rotate the driveshaft 1/4 turn.
-Check that the space between the end of the CV joint cap and the end of the transfer case flange is equal from the top of the bottom of the two components.
-Repeat this procedure several times.
-If the space is not equal at any point in the attachment, remove and reinstall the driveshaft as described in this procedure.

5. NOTE: Install new universal joint retainers and bolts. If new bolts are not available, coat the threads of the original bolts with Threadlock and Sealer E0AZ-19554-AA or equivalent meeting Ford specification WSK-M2G351-A5.

Install the new universal joint retainer and bolts.

6. Install the skid plate.

7. Lower the vehicle.

8. Turn on the air suspension switch, of so equipped.

Good luck!

-Rod