Well done. Followed your instincts against several people's opinions.

Damn weird that the noise appeared to come from the transfer box. Weirder still it did it in all positions apart from neutral. Who'd have put that mystery together? A learning lesson there: if it sounds like the transfer box but doesn't do it in neutral then the problem could be upstream!
 
I know. But thanks for everyone's help and opinions. I'm thinking that the noise must of traveled down the gear box and the transfer box was the last in the line so it came from there...?
 

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