Thanks..I have a trustworthy mechanic but I like being able to give him a good idea of what might be occurring. I will definitely be researching this fix.. Hopefully it's the answer I'm looking for. Thanks for sharing.

i have the same problem with my 2001. i replaced the seal twice and it still leaks...judging by the link to jeepforum i need to replace the bushing. so how do i...
A-remove the extension housing
B-remove the bushing

then what does it mean to ream the bushing?

please help. i would like to try doing this myself (with the help of someone to "ream & press the bushing)

thanks

The transmission extension housing can be removed after supporting the transmission and removing the transmission mounting.
The housing just bolts to the transmisssion, the bush needs to be reamed to ensure it is the correct diameter for the propshaft yoke that fits into it, bushes often become distorted slightly during the pressing in operation.
The reaming tool looks just like a large drill bit, 38mm to be precise, it needs to be done while the housing is clamped squarely to the drill/press stand so that the bore is correctly centered and true.

Ian

awesome!

thank you

great information, thanks guys!