Steve and Jeff, thank you for the reply. The halfshaft seals and the pinion seal do not have any visible oil leak. I saw a very minor leak from the sensor on the differential but the big leak appears to be far from the sensor. I will follow Steve advice to fix the problem. At the same time replace the rear flex disk and pinion seal which are still looking good but they are 13 year old. Parts are cheap comparing to the labor.
I will come back for more advice if I have problems or surprise during the repair.
Thank you very much, again, for the advice. Happy Easter!
PS: The light-blue differential oil appears to be the original oil from MB, expensive stuff.
[This message has been edited by be459 (edited 04-22-2000).]