When I bought my 4 runner about 3 weeks ago I changed all the fluids and got a good bit of milky looking oil out of the transfer case. I put fresh in, drove it a thousand miles or so and changed it again. The other day I had to take the shifter off to get it back into 2wd and there was water beaded on just about everything and rust on all the exposed surfaces.

Is there a way to get all the moisture out of it and clean up the rust, or do I just need a new transfer case?

Wow, seeing where you're located, did you happen to buy a rig that was flooded out in Katrina?

I'd be worried about the tranny too. Usually the breathers are located in or near the shifters for both the T-case and tranny, so you probably have water in the tranny too. I would change that fluid immediately.

I'm not sure if the rust is something that is easily fixable. Oiling everything is definately worth a shot and changing the fluids several times. You might be able to just replace your current shifter with a wrecking yard part if that's the main problem.

If water got into the tranny/transfer case, then it probably got up into the cab area too. I'd take a peak around the wiring/computer to make sure things aren't too cooroded.

well check everything. axles, hubs diffs, sounds like you got a flooded truck.
the only way that I can think of to get all the water out, would be to either change oil alot.. or open everything up and let it dry.. maybe a hellll of a bunch of wd40??? or alcohol fill it and let it sit for a few hours and drain it all back out. would be helll on the seals.
or open, drain, blow dryer or heat gun.

thinking about it over again, I think that I would go for the drain, pull all the drain and fill plugs shifters and use the heat gun.
or a garden sprayer with the alchol and wash every thing down really good, then the heat gun AFTER the alchol is gone.
good luck, I would like to hear how this turns out.

I really dont think that it was a katrina truck, it was located in New Iberia and I dont belive there was any flooding there.

What I do think happened was the previous owner was trying to build a cheep mud rig and flooded it. The interior is stripped to the metal but the price was right and i was planning on gutting and spraying the interior of what ever I got with a bedliner anyway.

Going to try opening it up and using the heat gun on it when I get home on thursday. Thanks for the sugjestions.

i was having trouble with water getting into my T case as well ... I eventually figured out the rubber seal around the shifter was bad, so everytime it rained or snowed the waster would spray up under the truck snd run down the shaft into the case... replaced the seal and no more water

If it's JUST the tcase, not the tranny and not the motor... change fluids a few times, and if no noise, then no worries. If noise, replacing the tcase bearings is not terribly difficult with a FSM, a press and a bearing separator.

I agree with the others. Change the 90W a couple of times a couple of days apart, and run it unless there's a noise. Check for a bad boot over the shifter, as mentioned.

Toy t-cases are stupid simple and unless a bearing is full of play or roaring, it's probably fine.

FYI, any time you submerge a toy above the top of the t-case for very long, you need to check the fluids in the tranny and t-case. They're not sealed and they vent though the shifter tower. So it's not hard for water to find a way in.