Before you go springing money for a 205, check the front axle shafts at the spider ends. I'd hate for you to shell out the dough and still have grinding noises when you put it in gear.
Years ago I had a '75 F150 with the fulltime 203 and I went to put it in reverse to back out of a drive. Put it in drive and the truck wouldn't go forward. Revved it up and it would just coast down the hill. The front driveshaft was spinning while sitting at a dead stop. Got pulled home 4 miles later and tore into the front diff as dad said he heard the noise coming from down there.
Turns out the spider gears and axle shafts all had stripped gears from the fulltime 203 operation. They had enough miles on them and 33's not helping them either. I replaced the shafts and spiders for some better used ones and the problem went away. Truck could move again but this time I invested in a part time conversion kit for the 203 and some lockout hubs. Much cheaper than a 205.
So check your front shafts and spiders.
