Transfer case trouble

[Matt shoemaker]

My 1998 Isuzu trooper has a problem with the trasfercase. It has developed a leak from somewhere. I have replaced the front output shaft seal and thought that took care of it, but at highway speeds {65 plus) it still leaks. Also if it is in 4 wheel drive and I turn the wheel it will some times pop out of 4 wheel high and make a horrid grinding noise. This happens even on gravel. Has anyone heard of transfer case problems or weaknesses. It is not TOD. It seems like the oil is coming from the top of the case but can't be sure. Also the gas mileage is bad 13.5 on averages in city and 15.9 on highway, any suggestions on how to raise it up.