By the way, here's the rig in question. I've yet to post a pic of it:

https://cimg2.ibsrv.net/gimg/www.che...e3f8f647c4.jpg

Worth the trouble, if you ask me.

Weeeeeeeeeeeellllllllll this is embarrassing. That larger wet spot that I swore occurred in the time it took to shift between reverse and drive? Turns out it was just water dripping from a small port at the bottom-center of the muffler. My friend and I started it up, rolled it back, let it sit for a minute, then he points toward the middle of the vehicle and says, "Is that what you're talking about?"

https://cimg5.ibsrv.net/gimg/www.che...1fb20fb418.jpg

Why, yes. Yes, it is.

I somehow just never could catch it doing that on my own, and because I do have the smaller leak around the diff, I guess I was just convinced that it was from the same problem. DOH!

HEY I could live with the embarrassment. I'd be doing backflips that it's not something more serious.

Not to spoil your party but even though I'm only seeing part of your pic what's that fluid dripping down the tire?

Funny you should ask. I went back out to take another look and let it run a few minutes longer, because I just couldn't accept that I'd been so dumb as to mistake a simple puddle of water with a different kind of fluid. Turns out, I'm not quite as big an idiot as I gave myself credit for a little while ago.

Sure enough, I noticed a new, good-sized spot of the same sized, same color fluid that I've told you guys about (not the stuff dripping from the diff, but the larger spots I've mentioned) - the dirty, greasy stuff I've mentioned. The location, consistency, smell, and color were all off for it to have been from the muffler/tailpipe. I noticed a dark, slick fluid in the back-left tire tread (what you pointed out from the picture above, EZEARL), and when I took a closer look, this is what I found:

https://cimg8.ibsrv.net/gimg/www.che...5fda5892b3.jpg

And:

https://cimg7.ibsrv.net/gimg/www.che...118ecf4d67.jpg

So, I'm 99.999999999% certain that I've found the source of the previously-unidentified fluid. It has to be brake fluid, right? Or does that look like it's coming from the axle? If it were coming from the axle it'd have to be grease, right? I wouldn't think grease would run like what's in the picture, so I'm gonna guess that I'm looking at brake fluid. Thoughts?

So, at the very least, it's looking more and more like I need to replace the valve cover gasket, the differential vent hose, a diff or pinion seal, and now either a brake line or something in the axle. Anything else I'm not thinking of at the moment?

Could also be a failed axle seal. Check your brake fluid and rear diff fluid levels. No mistaking the smell of brake fluid for gear lube either.

I did get a full pic of your XJ. Good looking for sure.

First thing tomorrow morning. I'm just glad to know that a.) I've honed in on the source, and b.) I CAN tell the difference between water and miscellaneous fluids.

Thanks for the time, input, and patience, guys. More to come.

And thanks for doting on my rig, EARL. Needs a little lovin', but I think it'll be a keeper.

No problem. We're glad to help when we can.

As Earl said, dripping out of the axle end is either brake fluid or diff fluid. Easiest way to tell the difference is smell. Diff fluid smells like butt, real pungent nasty smell. Either way, that needs to be fixed before the vehicle is operated on the road. If it is brake fluid, you could lose braking capability. If it is diff fluid, it is lubricating the brakes making them useless at that wheel.

Either way, you will likely have to replace the brake pads due to being fouled by oil.

Beautiful jeep. Very clean looking. The AC not working isn't a big deal. Could be a variety of issues. Anything from low on refrigerant due to leaking o ring, evaporator, or condenser. Bad compressor is a possibility too.

My dad (who's fairly competent in diagnosing mechanical issues) came over today to check out the XJ. I let him listen to it run for a few minutes, because in addition to what we've discussed in this thread, I've also noticed a slight, but consistent, abnormal sound in the motor. He seems to think a rocker arm, or something in that vicinity, might be sticking a little bit.

Now, I have absolutely nothing to base this on except paranoia and '00-'01 horror stories, but if he's right, is this an indication of the dreaded 0331 cracking issue? If I haven't done a very good job of explaining this, let me know and I'll provide as much additional information as I can.

Thanks for the info and compliments, bad_idea. I've no plans to leave the driveway until Monday when I get it to my mechanic. I can address small problems/part replacements here and there by myself, but I think this particular problem is likely out of my depth.

Likely not. The head cracking issue shouldn't make noise, to my knowledge. The head cracking basically acts like a bad head gasket. It allows oil, coolant, and/or combustion chamber to mingle. I have no first hand experience with a cracked head, but I been around the block once or twice. Even stayed at a Holiday Inn.

To check for the cracked head, keep an eye on your oil and your coolant. If the oil looks milky, BAD. If the coolant has an oil slick on top, BAD.

This has all been very helpful. Thanks to each of you for contributing. I'll have more info tomorrow if anyone's interested.

Got my XJ back today. My leak around the front diff. turned out to be a bad pinion seal. Replaced that and the valve cover gasket, and haven't seen any further leaking thus far. The problem with the back wheel was a bad wheel cylinder, and the leak ruined the brake shoes, so we replaced all that, as well. Then we found more. Both U-joints needed to be replaced (one was completely shot), as well as a steering stabilizer shock.

Everything felt fine on the drive home (roughly fifteen minutes), but for the first time since I've owned it, it started to overheat. It never climbed beyond the first notch past 210, and it actually seemed to warm up when I'd let off the gas. Coasting downhill didn't seem to help, either.

UPDATE #2: Got curious and took the XJ up the road and back. In less than five minutes the temp was up past 210, then on the way back it suddenly spiked to the notch below the red, sat there for a second, then dropped back to just above 210. Did that once more before I made it back to the driveway. Hoping I just need to replace the thermostat. Any thoughts?

Sounds like your making some decent progress.

Could just be the sending unit. Were there any visual signs under the hood that it was overheating? I wouldn't drive it until I verified the temp with an infrared thermometer.
Here's what mean if you don't know.

Yeah. Steam around/from the motor. Hard to say exactly where it was coming from. Looked like it was around the valve cover, but I wouldn't promise it. If the valve cover gasket was installed improperly, could it lead to overheating or just a lot of leaking oil?