There is a seal on the transmission side. The shaft from the transfer case mates to the shaft on the tranny when the two are connected. It's a fairly common failure point for leaks.
You can use a 'seal puller' but a long screwdriver will work to pry the old one out. I've even heard of people running a drywall screw into the old seal face and then pulled it out that way.
Be carefull not to run the new seal in too deep (past flush with outer edge).
Put some axle grease on the inside of the new seal to help keep the spring inside the seal in place. If you hit it wrong with the transfer case when you are putting it back together, that spring can possibly dislodge and you are back to leaking.
On a 42RE tranny the seal Mopar part number 4269956AB It will have green outer edge.
It's a very straight forward process, it just takes a few hours. The top bolt for the transfer case is a pain to get at. I use a stubby 9/16 with a built in ratchet for that bolt. Support the transfer case with a jack... it's heavy! You will have to drop drop both drive shafts out of the way. Mark the ends before you remove them so you can match them up later.
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