I got under my Jeep to spray paint the bottom and I noticed the transfer case was touching the TC crossmember. I've seen other Jeeps where you have at lease 2-3 inches of clearance between the two. Do you think the Transmission motor mount is bad? Or in the motor and trans just moving down? The bottom of the TC is flush with the bottom of the Trans Crossmember.

 

What TC do you have?

With an 89, I am going to take a stab at a NP242.

Some pics would be very helpful

 

Here is the pic. I took off the TC Crossmember. The Trans crossmember is in the front and the TC is in the back. See how they are flush.