I have a 2k truck and noticed a leak from the xfer case. I cleaned the case, power washed and it looked clean after that. Drove it about 25 miles and checked next am. It appears to be leaking from the fill hole. I'm assuming on the back side of the case there are 2 large plugs, one for fill the other for drain. The upper plug looks to be leaking a drop of oil a day. Is there a rubber O ring between the plug and the fill hole? If so it looks like replacing the seal fixes the problem?

 

I just watched a YouTube video which showed using teflon tape on the plug threads before reinstalling the plugs. That's OK?

 

I can't see how it would cause an issue. Give it a shot and let us know how it turns out!

 

Try black silicone very resistant to oil & high temps

 

they make a pink teflon tape that is resistant to motor vehicle fuels and oils, should fix you right up