Gilly, Transfer Case advice
 

My Dealer has confirmed that my transfer case on my 98 ML is bad @ ~142K miles. It was making a clunking noise, when accelerating firmly on a turn, like turning on to a highway entrance ramp. This has gotten much worse across the last month, such that it even happens accelerating firmly up any slight hill.
I have a new engine about 20K miles ago, replaced under that "sludge" issue fix. Given the threads on this board, my question is should I be replacing this transfer case with a later model design? or has MB taken care of any design issue with the replacement one would order?
Thanks in advance for any advice!
Charlie

Not Gilly BUT...

The 1998-99(early) transfer case has a 50/50 torque split & that caused several problems. Including rapid chain wear.

ANY of the later designs are a 55/45(front) torque split & are much better.
You can replace the TC on that ML with any other W163 ML case.