This is a common problem with the 263HD Transfer Case. The pump rubs against a clip which eventually either the clip breaks or it rubs a whole in the casing or both. The metal particles which are rubbed off aren't large enough to do any damage to the t-case but if the clip brakes off it may. A permanant fix to this problem is to purchase a kit from Merchant-Automotive.com which will fix this problem. Hopefully if you don't allow the oil to be all drained out thru the hole no damage other than the hole in the casing will occur. Plastering some JB weld over the hole will work as a short term fix but I'd imagine that over time the wearing would cause a larger hole or at least some kind of additional wear on the casing. Of course, if the oil level gets too low in the t-case it won't have the proper lubrication which will cause the t-case to grenande when you are the furthest place away from home. The hardest part about installing the pump rub repair kit is removing and reinstalling the t-case which I did myself over the course of a weekend by myself using the only special tools as a torque wrench, snap ring pliers, floor jack, jack stands x 4, motorcycle lift, and a ratcheting strap to help pull the t-case off and back on again. If you are a likely candidate to possibly have this happen to you I'd recommend installing the pump rub kit. There is a video on youtube about this that explains this real well. I think if you type in something to the effect of pump rub you may come across it. HTH

 

Thanks for the reply Rocker. Your information is well taken. To update you on the the leak as originally posted. I did have very good success with J-B weld holding the leak. However, another small hole rubbed through just a few inches from the 1st one. Again J-B weld was applied and that did equally as well. It was after approx 18K miles that the shaft seal developed a leak so I decided to repair the seal and replace the the case. Here's the breakdown of my cost from the dealership: TRANSFER CASE LEAK (pump rub) = R & R rear case half, Total Parts - $751.98 Labor - $360.80

 

I have the same issue, I just did the JB Weld quick fix, It's drying as I write this. I'm hoping the JB weld will hold long enough for me to determine if I suffered any internal damage from running low on fluid. If the unit doesn't manifest any signs of damage, I will order a new half case and the improved design pump housing in a couple of months, if it does show damage, I'll be buying a rebuilt unit, just a question of do I spend a little or a lot.
Thank you for posting this thread, it gave me excellent insight into a problem I never would have expected.

 

Savannah, in effort to answer your question...How low did your oil go? Was the t-case making any unusual noise when shifting in/out of modes? How much play is there in the drive shaft where it penetrates the t-case? Is the rear shaft seal leaking also? How long do you think it was leaking before you caught it i.e. did you soon notice oil stains in your driveway? How annul are you? These are all questions that I would be asking myself. Especially the last one because yourself is the one that has to live with the decision you make. This type of t-case has an internal pump which lubes the mose remote bearings, it's not like many of the standard t-cases which lube using the flinger method. Because of the pump method long as the oil pump suction is below the oil level everything is still getting oil. Now, to sum up the answers to these questions, if the rear seal isn't leaking, and there is no play in the shaft where it penetrates the casing then the rear bushing where the shaft runs on was getting oil, that's good. If there are no unusual noises and the t-case shifts effortlessly then I's assume it's working as designed and the bearings aren't worn from running dry, that's great. How low did the oil go? If I remember correctly it only holds around 2 quarts, if you had to add more than say 1 quart and any of the above hold true then I'd be thinking about at a mimimum of tearing the casing down for inspection and being ready for a rebuild. The answer to the annul part, only you can answer that. Me, I'm pretty annul, just ask my Wife. I had to do a complete replacement due to cost. Most of the bone yards here in CA know the value of these t-cases and I couldn't find a deal on one that I was happy with since I knew I had to put an additional $300.00 into it for the t-case savor kit and rear seal. For the damn rear seal alone Chevy charged me $75.00. I did my own work which was really easy other than man handling the case from under the truck and around the garage. One additional note, make sure you fill it with the right oil. When I went to the Chevy Dealer they specifically asked me quote "is it the red or the blue oil"? I asked them why rhey couldn'nt look it up, well they couldn't. I take the blue oil. Hopefully I helped and didn't leave you worse off than what you started. If you get the tools, some beer and a friend to help you drink the beer you can have it all done in a weekend or less. I drank beer and did it by myself and it took a weekend. Get the torque settings for the bolts also. Good luck...

 

Sorry about the lousy spelling and grammer, I didn't proof read it before I sent it and I'm a lousy typer...

 

Rock, To answer some of your questions, The thing that led me to inspect the Transfer Case was a whirring noise whenever I got above 35mph. It started making the noise one day and a few days later I checked it out. The bottom of the truck was heavily sprayed with oil which I initially assumed was coming from the transfer case rear seal but upon closer inspection realized that there were too many areas ahead of the tailshaft housing that could not have gotten wet from oil being slung by the driveshaft. I added one quart of fluid (all the Chevy dealer had in stock at the time), and the noise immediately went away. that was about 4 weeks ago. Last week the the whirring noise returned so Monday,I went back to the dealer and bought 3 quarts of fluid to do a complete fluid change. I drained out about 1 quart of old fluid, it was dirty but didn't show any metal shavings or particles. After the change I did a 10 mi test drive and found drops of fresh fluid hanging on the case bolts. Seeing that I was definately losing fluid at a pretty fast rate, I searched the forum which brought me to this thread. I found a pump rub hole which i patched with JB weld yesterday. This morning I topped up the transfer case, It's total capacity is 2 Quarts and after 5 days it had dropped by about a quarter of a quart (does that make sense??) I did a 30 mile test drive and showed no leakage. It is shifting in/out of 4wd just fine,I'm not finding any lash, endplay or noise coming from the transfer case so I feel pretty confident that I may have dodged a bullet as far as any severe damage is concerned, I don't think I would want to run the Baja 400 with that transfer case but it's probably fine for how I use it, (trips to Home Depot). Of course, I am also pretty **** and this will probably pick at the back of my mind until I just go out and buy a rebuilt unit with the pump upgrade. Too bad we live on opposite ends of the country, otherwise I try to talk you into coming over, help me drink some beer eat some ribs and wrestle with a Chevy Transfer Case. My truck is an '05 1500 with automatic and Quadrasteer, it has the NV 246 transfer case which specifies GM Auto Trak II synthetic fluid, (the blue stuff) at about ten bucks a quart. Next I need to tackle the rear end fluid change, can't wait to see what GM wants for the Quadrasteer lube.

 

Skoot61 are you still driving the truck with jb weld repair??
I've got the same problem. Think of going the jb weld route.
Thanks

 

Thanks for posting. I have a 02 HD, 178,000mi. Great Truck! Stealership wants a fortune to repair the transfer case. Is your's still holding? I don't use the 4x4 much at all, but would like to stop the leaks.
Thanks -
Joseph

 

Ive used it on mine and haven't had a problem or leak since. Make sure if you have the Auto 4wd to use the blue transfer case fluid. Some shops have it, most dont. Get it from the dealer if you have to.

 

I had the problem on my truck as well. My mechanic welded the hole and used different type of clips for the pump, and that was back in 2007 when this fix was done, and it has held up well.
I noticed mine when I saw smoke coming up from in between the cab and bed when I came to a stop, because the fluid was being sprayed out the tiny little hole, onto the exhaust. I caught it in time, and they only had to replace the pump and weld the hole.
Just make sure you get it fixed by a good mechanic.