Sadly, I just heard from a repair shop.
They say it IS the transfer case, and that there IS in fact a chain/sprocket combination inside that is "skipping".
He also went on to say that Mercedes has come out with an upgraded transfer case, and does not recommend rebuilding the "older" style.....
This is a 1998 ML320 with 119k miles on it.
Questions:
Is this true about the upgraded transfer units??
The shop quoted me 5 hours labor. How hard is this for a reasonably competent home mechanic?? I've replaced clutches and transmissions before, but never worked on a 4WD.
Any special tools or tricks to know??
Or is it a pretty straight-forward R&R, with just a good day's effort??
Thanks.....

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Barry