I had a very similar problem and it turned out to be a snap-ring on the T-case rear output shaft,(inside the tail piece). Easy to check and easy to fix. Good luck dude, Ken

 

Any more specifics on the snap ring....where exactly to look for it....what do I need to do to find it?
Any body else found this problem to be this snap ring?

 

"Grinding or "Impact wrench" sound that gets louder with engine load - Transfer case output shaft snap ring broken allows shaft assembly to move backward and grind into the case"

IS DIS IT?

[IMG]local://upfiles/16276/C21458B4C37F478BAEBF377AA447741F.jpg[/IMG]

 

Great pic and diagram....That looks like the snap ring "huttbutt" was refering to.
That would be great if that was my problem....if that is my problem would the grinding noise go away when 4wd was engaged?

 

It was my right front wheel/hub bearing! Truck drives smooth now!

 

did it sound like the noise was comming from the rear end? I am having the same problem and someone told me it is the rear differential. The noise goes away if I let off the gas and then repress the gas. It is a terrible grinding noise that is really bad.