NP205 Experts - Sudden Transfer Case Noise (?) in 2WD

[joeydurango]

Looked around quite a bit and didn't see anything that sounded like my particular issue, so I'm asking fresh.

'72 K10, TH350, D44 front axle, NP205 case. NP205 is properly full with gear oil (I know some say to use ATF, I prefer gear oil).

I've used 4WD a fair bit on my truck. Both 4LO and 4HI work as they should. I rebuilt the axle a couple years ago. The transfer case has always felt nice and tight, not sloppy or noisy (I had another worn out one years ago to compare to.)

Shifting hasn't ever been super smooth. My procedure is to stop, lock the hubs, put transmission in neutral, then shift the case as necessary. Shifting into 4LO or 4HI from 2HI is no problem. Shifting from 4LO to 2HI, I often get a grinding noise - I assume this is because I'm not shifting quickly enough and the transmission begins spinning when everything is in the neutral state. If I leave the case in neutral and put the transmission in park, I get a clicking noise (much milder than the gear-grinding noise). Again, I assume this is because the transmission has begun spinning with the engine. Neither of these noises ever struck me as indicating serious harm.

Current problem: After a recent 4x4 drive, I shifted back into 2HI, unlocked the hubs, and drove back to town with no problems. Once at slow speed in town, I noticed that while on the gas (even slightly) everything sounded normal, but if I let off the gas and coasted I could hear a slight grinding/jangling noise, and could feel a slight vibration through the floorboards. I checked the hubs to make sure they were unlocked - yes, and the noise was still there. Tested with hubs unlocked in both 4HI and 4LO and the noise was still present. I pulled the caps off the hubs and everything is in proper working order - the hubs are not accidentally engaging. Made a mark on the front driveshaft, and sure enough, when I don't hear the noise, it doesn't move. When the noise is present, the driveshaft does spin, even though the hubs are unlocked and the case is in 2HI. It feels like the front driveshaft isn't completely engaged, just partially/intermittently, if that's possible, like something isn't quite staying where it should.

So, the questions: For you NP205 experts out there, does this sound like something wrong with the case? Is it possible to adjust something externally that might help, or am I looking at something broken internally? And was this potentially caused by the occasional grinding of gears when going back to 2HI?

Any advice/knowledge would be greatly appreciated!