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With all of the pitting on the gear I'd have to wonder what the bearings look like. You'll find the pitting from the vehicle sitting for many years and the moisture gets to the top of the gear that's not submerged in gear lube.
First time I found ATF in the standard transmissions was in 1978 servicing new Dodge vehicles. Stuck my finger in the fill hole and had ATF. Had to check out what was going on. Same year I pulled a differential cover and found no gasket, just silicone sealer.
And do them all. Some have been known to be just the end studs but many have found it could be any of the holes. I like to use Permatex #2 or Teflon paste.
Ideally you want one third of the fan out of the shroud. Doesn't matter about the distance, fan to radiator, as long as it's not too close, one inch maximum. One inch clearance from the end of the fan blades to the shroud opening seems to work.
That's the Silk Purse out of a Pigs Ear saying.
Watching a Boyd Coddington show years ago, they were waiting on the rear taillights to come back from the chrome plater for a beautiful red and white '55 Chevy. It was the last piece to finish the restoration as the owner was showing up at...
I know the feeling and I'm like 5' 7". I could use a little more leg room with my seat all the way back in my '62. Makes you think about how short the average person was back then.
Back in the day we would use Rislone, a couple or three quarts and run the engine for awhile. Like stated previously, it did loosen up some sludge in a 258 that wasn't getting any top end lubrication and resulted in a bad rod knock. It really cleaned out the sludge on a high mileage engine...
Sounds like you're talking about the velocity joint at the transfer case. If you're just replacing the U joint at the axle can't you just slide the shaft apart and leave the transfer case end bolted up? Put the other three bolts back in.