Your t-case popping out of LO could be caused by it not getting all the was into gear. Maybe your shift linkage is a bit out of adjustment or binding and causing it not to get all the way in. I had it happen on an old Jeep.
Thunking, I would first say a u-joint. Is it your output shaft on your t-case? Check the gears inside your diff for a borken/bent tooth.
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SWEET7T
1970 C10, 2wd, LB, 307/TH350/3.08. PS, PB
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