I recently bought a ‘99 4Runner, manual transmission. Body and frame are super clean and was a great price so I am still willing to put a good deal of money into keeping it running.

Basically, while driving it a few days after purchase I noticed that there were some dots of oil that looked splashed on the rear hatch. Checked the oil level and learned that whoever changed it last last over filled it about 1.5qts (!!!). It had leaked all over the undercarriage. Immediately had the oil changed at the closest mechanic and didn’t see any busted seals or anything.
Took the car straight to a wash to have the undercarriage cleaned and was going about 40mph when I hear a sort of thud and suddenly am unable to accelerate. I switch into neutral and coast to the side of the road where I see my rear differential smoking a bit. I wait a few minutes then try and move the car in 2wd with no luck. I switch into 4hi and am able to move and subsequently engage all the gears, including reverse, but am unable to engage 2wd again, and there’s a sort of grinding noise when I attempt to engage 2wd.

I’m new to working on 4wd vehicles and am wondering what you think may have happened — I don’t hear any abnormal noises when driving in 4wd and can shift through all gears with no issue. I assume it’s a transfer case problem but am curious how the overflow of oil may have caused this, if it even did ?

As of right now, it drives completely fine in 4wd but will not engage 2wd. Basically want to run through the possibilities of what it could be before I have a mechanic try and tell me I need to replace the whole transfer case

 

You’re going to have to do some diagnostics first.

You said the rear diff was smoking when you stopped. Can you take a picture and point to where you saw the smoke? Diffs shouldn’t have anything in them that get hot enough to smoke. If you did in fact get something that hot, I would say you had a bearing seize and come apart but let’s cross that bridge later.

There is a rear axle vent that may have been venting, although that usually isn’t a continuous stream of smoke that should just be a slight off-gas of pressure as the fluid heats and expands.

Unrelated to your over filled oil is the possibility an axle seal went bad. These are somewhat common failures and can be identified by gear lube on the inside face of your rear tires as the oil pushes out passes the seal at the end of the axle tube.

Next you can try dropping your front driveshaft and seeing if the truck still moves in 4wd but with just the rear driveshaft attached. If it doesn’t move with the rear driveshaft only then I would suspect your rear diff came apart, maybe it ate a bunch of teeth off the ring and pinion, maybe the ring gear bolts came undone, maybe the pinion bearing seized and sheared off, that will take some digging to figure out.

Lastly your transfer case. Why won’t it shift? Does the lever move but you are still engaged in 4wd? Is the lever jammed?