Just a couple hours ago i had to take this part off to mount my BudBuilt crossmember. It bolted on the back side of my transfer case. I only know its a "weight" but whats its purpose and do i need it on there? I have drive shaft vibrations starting at 55mph+ and i'm wondering if it's from removing this part or from my small 3/4" drivetrain lift?

 

I don't know about the drivetrain lift, but I do know what that part is. It is a dynamic damper. It is there to help absorb vibrations from the drivetrain. Removing that part could be the cause for your vibrations.

Here is a picture from the fsm to show it. Widget

 

Just move it up and use one bolt to attach it.( lower hole of damper to upper hole in tcase) It fits fine up there and may help with the vibration.