I had a local shop take care of the driveline angle issue for me. The cheap fix entailed installing some steel wedges under the leaf springs and dropped the transfer case by 3/4". That fix was couple hundred bucks parts and labor. The more appropriate fix is to go with the SYE kit (i'm not sure if this would've negated the wedges or not). That fix is in the $600+ range. I went cheap since i'm not doing any hardcore wheeling and 3/4" of transcase clearance loss is no biggie for me.

I'm not sure if that grinding noise was damaging anything or not. I figure better safe than sorry.