Theres a possibility it could well be the transfer chain the only way I can think of checking it, would be to disconnect both propshafts at the transfer box end, with the main gearbox in park, handbrake off and see how much rotational movement is in the rear output shaft.

118,000 mls seems a bit low to me but its a possibility.

But I don't know how much movement there is with a good chain.
A replacement chain is 70.00 + vat

Transfer Box Drive Chain (Allmakes) STC3238 Island 4x4 - Specialists in Land Rover and Range Rover Parts and accessories for all models. UK and worldwide mail order.

I will have a look the weekend, is it case of talking the transfer box off the car, or is there a cover plate at all, if changing the belt are there any other parts within the box that would be an idea to change at all cheers
 
I have the Borg Warner transfer box overhaul manual in PDF format, send me an email address by pm and I'II forward you the manual.

There doesn't seem much else that fails apart from the VCU which is expensive to replace, the only other thing I've heard of being replaced is the drive chain.
 
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