@JohnVee is on the money. It could have to do with the fluid transfer issue. Was the transmission leaking from up at the top? When the seal between the trans and transfer case goes bad, the transfer case tends to pump its fluid into the trans, overfilling it and causing it to leak out of the little vent at the top. Meanwhile, the transfer case runs dry. This just might be your problem. Check the fluid level in your transfer case. That will tell you a lot. There is a temporary fix for this affliction that involves connecting the fill plugs of both the trans and transfer case with a hose to allow the fluids to normalize themselves. The real fix is to rebuild your transfer case, replacing the seal in the process.
