I have already fixed the issue, the title is correct. I figured I'd post up though, so the rest of you know what could happen.
https://youtu.be/rRUoz0r3vog
The above video shows what I was dealing with, a loud popping noise from the front of the vehicle and the fronts were "surging" under load.
I told my wife that it was the locker engaging in the video so she wouldn't freak out since we were away from an improved road.
I keep up with my half-shafts, and other 4wd maintenance pretty often, but I switched my half-shafts out just-in-case and had the same problems. The loud popping would happen while climbing, when turning on asphalt and binding up the drive line, and when taking off from full-throttle in gravel with 4wd engaged, whether in low or high range.
It behaved normally in 2wd mode.
I put the vehicle in park with 4hi on, and crawled under the vehicle to see what was binding up. The front prop shaft had an incredible amount of slop when I tried to turn it by hand back and forth with all four tires on the ground.
Because of this, I jerked the TC. Once I split it in half, I noticed that the chain just didn't look right. I took the chain out of my 126 case and compared the two but saw no difference. All TC internals looked great,the clutches looked like they had never been used. I switched chains anyway, and threw the case back together, then reinstalled.
I no longer have any noises coming from the TC in any of the above mentioned scenarios..
How did I break it in the first place you ask? I attempted a climb in 4hi yet thought I was in 4lo. Towards the top of the climb, we heard a faint snap, the engine was turning around 3k RPM.
Be careful out there boys!