What is a Transfer Case "Pump Rub" Failure?
GM transfer cases used from 1998 through early 2007 use a gear pump inside the case that is driven off the mainshaft. The pump forces oil to the planetary as well as the drive sprocket sleeve. Because the pump is driven by the shaft, the housing of the pump must "float" in the rear housing. There are tabs around the pump housing that fit into spots in the rear housing to locate the pump housing and prevent it from spinning inside the case with the mainshaft. Over time, the pump tabs can start to wear on the rear housing. GM installed a spring steel clip in the housing intended to prevent wear, but the clip can break and be rendered useless.
Since the pump housing is aluminum and is a harder material than the magnesium rear housing, it can wear a hole in the rear housing and cause a very small leak. This leak is frequently high enough on the case that it typically will not leak when vehicle is not moving and therefore not leaving any drops on the ground; it will however leak while the vehicle is in motion. Unfortunately, since the transfer case does not have a low fluid indicator the pump rub failure is often not found until there is transfer case damage from running the case out of fluid.