Hahaha, Glad I could help k85...
38377k5 the magnet has some metal filings on the bottom third of the magnet, all neatly arranged I'm guessing thanks to the magnetic field, top 2/3's of the magnet is clean. Oil was pretty clean, and there wasn't any debris or metal in the bottom of the housing. However, from the several different layers of paint on the old cover, I'm assuming this things been opened up a few times in it's life... Gears looked surprisingly good, and there's no play up and down, or side to side at the pinion, but when I watch the pinion as the trans is shifted from drive to reverse it will rotate approximately 15 degrees+\-. From underneath it is hard to tell where the noise is coming from, as strange as that sounds, seems to come from transfer case/tailshaft area, but when driving it seems to come from the rear. From the searches I've been doing it would seem that I shouldn't have been able to move the chain invent transfer case, has this thing stretched? I've been looking at JB Conversions rebuild kits, and it seems simple enough, but looks like a full days job to do it right. I guess it's time to just bite the bullet and rebuild the Tcase and the rear, I'm in this truck an unbelievable amount of $$$ already... There's no turning back!!! All in all it's still a great truck, and fun to drive. My first project 4x4, every other truck I've owned was new, I only ever had to change the oil, brakes, and tires. I figure fix all this crap and learn on it before I start lifting and swapping axles etc... I got a thumbs up from another K5 owner yesterday coming home from work, a nice forest green and gold '89 to '91 like mine. It looked really clean and pretty stock. Somebody in Easton is daily driving a M1009 now, I pass him a couple times a week on my commute.