We have a 1990 4-matic, and when our transfer case went out our current, none dealer mechanic said it was a problem in the early design. So my dad contacted Mercedes Benz of North America, and after much dispute got them to pay for a third, the dealer that we bought the car from to pay a third, and then we took the last third. Maybe you can try calling to see if you can work out a deal.

Good Luck
Ranger