dvs_dave

That’s the front prop-shaft housing. If fluid leaks through either of the shaft seals at the transfer case or the front diff, it’ll drip out there. Although it’s an unusual thing to happen. The fluids aren’t shared on the 4.2i.

I’d hazard a guess that your grinding was not because of the oil type, rather a lack of oil as it had leaked out.

The V8 TDI, V10, W12 motors, there is a cooler for the transfer case and front diff, and they DO share the same fluid as they are both connected to the same cooler.

And to reiterate the warnings from ZF around the fluid for the transfer case:

WARNING:
The "STURACO FM 1992" additive is only needed after renewal (exchange) of the Torsen differential.
After assembly, pour the additive directly (axially) into the Torsen differential with the transfer case in a vertical position.

Note!
When adjusting the oil level during After Sales Service, no Sturaco needs to be added. Adjust to the correct level with SAF AG4 only.

It even goes as far as to say you specifically have to pour the friction modifier DIRECTLY into the Torsen diff gearsets whilst the transfer case is on the bench. ie, not add it via the fill port.

Pages 7-10
htps://www.thectsc.com/images/pdf/6HP26A_61_Catalog.pdf

AEightSilver

There was zero issues with binding/grinding or gear changes with that leak. The car drove normally. The underside of the transmission itself was wet but on the floor there was only a 3in spot so I guess when the car ran it started to leak and didn't continue when stopped.

The grinding happened each time after the leak repair and related fluid changes where completed, not beforehand. The first time they didn't use original Audi seals because they couldn't be sourced and the leak came back again about 1 year later. The 2nd time they got them from ZF or something like that. In the 2nd go around I had the rear main seal and some of the engine plugs replaced at the same time. In both instances, I had the fluid changed in all 3 differentials for good measure along with the trans fluid itself. Thinking about it, maybe the seal replacement required some kind of tear down of the Torsen bits to get at the shaft or at minimum the fluid was actually flushed vs drain/fill which removed significant FM from the internals.

dvs_dave

…and casts a very different light on things! You basically had a double rebuild of the transfer case, and the wrong fluid was put back in each time. So it’s hardly a surprise that you were having issues until the correct fluid was put in!

This however is a completely different scenario to a straight up fluid change, which is what the OP is about. In this instance, the original advice stands.

AEightSilver

Can't argue with that. Lesson learned: Never argue with an Audiworld Wiseguy!

dvs_dave

You know it