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I let it drain from the seal but not from the drain plug so that could very well be the issue. Just curious though wouldn't the water contamination eventually resolve itself through the breather?

so I recently picked up an 85 4x4 and knew she'd need a little love, it's my daily so I try to keep her as mechanically sound as I can, doing all the work in my off time. First issue I noticed was that the front differential was leaking. At first glance and brief study I thought the rack and...