There is some mis-information on here....your 68' does not have 3.7 gears, it's equipped with the standard 4.10's
Everybody has an opinion, heres mine: I'd go with the NV4500 trans mated to an Orion or split case. BUT, I've been running a stock 3 speed transfer case (exactly like the one you currently have) in my truck for 13+ years now without issue. Heavy wheeling, Vortec 5.7, ARB's, 1 ton axles and it keeps going just fine. I have a light foot and it's braced. The NV4500 is a good shifting trans and you WILL want the overdrive unless you are going to run 37"s at least. With no overdrive, 37"s and 3.7 axle gears, I do about 2000 rpm at 60MPH.
The VSS is not a big deal, there are lots of ways to get it working correctly. Here's mine which has 31,000+ trouble free miles on it. It uses the standard extension housing however it required an adapter drive pin (about $10) from a speedo shop. I sourced the magnetic pulse sender from Speed Scene Wiring. Good luck with your conversion, make it into what YOU want.
Everybody has an opinion, heres mine: I'd go with the NV4500 trans mated to an Orion or split case. BUT, I've been running a stock 3 speed transfer case (exactly like the one you currently have) in my truck for 13+ years now without issue. Heavy wheeling, Vortec 5.7, ARB's, 1 ton axles and it keeps going just fine. I have a light foot and it's braced. The NV4500 is a good shifting trans and you WILL want the overdrive unless you are going to run 37"s at least. With no overdrive, 37"s and 3.7 axle gears, I do about 2000 rpm at 60MPH.
The VSS is not a big deal, there are lots of ways to get it working correctly. Here's mine which has 31,000+ trouble free miles on it. It uses the standard extension housing however it required an adapter drive pin (about $10) from a speedo shop. I sourced the magnetic pulse sender from Speed Scene Wiring. Good luck with your conversion, make it into what YOU want.