First, a "leak in the transfer case" can be one of two things, I've got experience there, thus no longer any 4matics:

If it leaks fluid out of the case onto the outside of the case / on the ground, it will not affect the 4matic function. Mostly an inconvenience to continue wiping its butt and keeping the case full.

The more serious leak is hydraulic (control) fluid from the internal control servos to the gear oil, which will if serious enough not allow proper operation of the clutch servos due to the leaky internal seals / inadequate hydraulic pressure. This will require a complete R&R of the xfer case to repair and I don't believe it is optional as the fluid will continue to migrate into the gear oil whether you use the 4matic or disable it.

4matics aren't that hard to buy that work properly, I wouldn't spend any decent amount of money for one that has expensive problems. If it's already yours, then it's different, but don't buy it with problems especially if not completely defined. The 4matic computer can also be the problem, or any number of the several sensors, how much do you trust these people?

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Gone to the dark side

- Jeff

To add to this, those that will have expensive problems will be those in W124s. This system isn't perfected until the W210.

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Kent Christensen
Albuquerque
'07 GL320CDI, '10 CL550. '01 Porsche Boxster
Two BMW motorcycles