1) It was definitely the transfer case

2) I kept the 231D in it

3) I bought the FULL rebuild kit from JB conversions. They were super helpful, sent me BOTH CHAINS, the thin and wide since we didnt know which one it was, and I can return the chain I didnt use http://www.jbconversions.com/products/np231j/2034.php

4) the chain had almost 3/4" of slop in it, was eating teeth on the chain, and eating the insides of the transfer case. It was BAD

5) 8 cans of brake cleen, 4 hours of patience, a large variety of large sockets, and very thorough work, I rebuilt my transfer case

6) It runs AMAZING now, and all 3 ranges work as they should

7) Refilled with Mobil 1 Synthetic ATF.



Noises it was making...

a) it was not based of engine rpm, rather road speed. First indication it was driveline related

b) you could have the truck in neutral, engine at idle, clutch in or out, didnt matter, and noise was still there. Indication its not engine, not clutch, not transmission

c) you could hear the slapping chain almost up to about 40-50mph, and any faster, you couldnt hear it as there was enough load/speed/noise, you couldnt hear it anymore

d) finally determination was done by putting truck on 4 jackstands, and having someone under the truck listening. In 2wd, you couldnt hear anything because the front tires were not turning (i.e. the chain wasnt turning). As soon as you spun the front tires by hand, it was plain as day, especially when u are under the truck, that the chain was SUPER loose



I unfortunately didnt get any pictures, as I/my hands were just too nasty to be playing with the camera the whole time

 

cool glad you got it fixed!

 

I happen to have a spare 231-D out of my 1998 Dakota.