Worn bushings, worn inside axle splines or driveshafts as others have pointed out. "Needs a new differential" is a highly unlikely solution. Seek a second opinion after you've checked the obvious issues listed above.
I went through this dilemma back in 2019 when I couldn't look at my buggered clearcoat anymore. I had one more condition: it needed to be a good paint job, but not such high quality that I'd be sweating it every time I hit the trails or (worse)...
Easy to order, but pricey. HUGE difference, I did it a few years ago on one of my 100s and recently ordered another one for my other 100 during one of the big Toyota OEM sales. Below is the part number for my 99's, not sure if it carried through...
I carry a couple of spare lugs and M14 nuts in my parts kit for the same reason, although I confess I've just used a brass drift and BFH to back them out before. Your solution seems more elegant and less damaging!
From the spray pattern it looks more like axles that brakes I don't see how brake fluid would have exited the middle of the axle. If its gear oil, you should be able to smell it, that stuff is pretty distinctive. Probably feel it, too, as it's...
Safe to drive for a while? Probably. Worth keeping if you plan to farm out most of the work? Not in my opinion. 100s aren't that rare, the market for them is relatively soft, and you can find them (especially in California) in much better...
Since we've named every possible thing under the sun, I will reinforce one of the earlier suggestions since this happened on my '99 recently. Grease the driveshafts and u-joints, what you are describing is the exact same thing that I was...
Just yesterday a River Rock Mica 1999 popped up here in Austin on FBM, with 170Kish miles and in what looked like great condition. A friend who's been looking for one jumped on it, arranged to go see it. When he ran the CarFax the truck came up...