Gotta love the mysteries of prior owners. 

Okay, so my first indication that something was up was when I pulled the speedo gear out of the t-case housing
and fluid came out.  Seeing as how this is at least 2" above the fill plug I got to wondering a bit just why that was happening.  

Meanwhile the fluid didn't look or smell like gear lube.  Has me wondering...

Check my auto trans fluid dip stick...it's a bit high but looks and smells like ATF that's got a lot of miles on it.  Not burnt but not like new cherry juice.

So I take out the fill plug on the t-case...and fluid starts coming out as soon as I open it. ???   After letting that drain I open the drain plug and more of the same stuff comes out but with no real sludge or syrupy stuff coming out.  I got well over the 1.6 quarts I should have gotten out of it.  Meanwhile I'm still not sure what the fluid is, either ATF or broken down gear lube.  It must have been changed at some point because it's not dirty enough for 150k worth of miles and there's no sludge like I've seen on other high mileage t-cases where the gear lube broke down and seperated.

After it was down to just a trickle I checked the trans dipstick and it still reads the same, just a bit high.  I'm hoping this is a good sign and my fears of the 'case and trans swapping fluids is unfounded.

I'm leaving it to drain overnight and we'll see if anything changes.

we've seen some of the older chev trucks will leak tranny fluid out of the output shaft and into the t case - maybe thats what is happening. i have not had my tranny/t case apart so i'm not too sure if this is possible on the zuki's.

derek

You cant dismiss them filling it completely. When I still worked at a Ford dealership as a mechanic, an older guy went to save some cash and did his 1st oil change and  misread the owners manual. For some reason he misread qts for ga and tried to put 12 gallons of oil into a brand new powerstroke with 2800 miles on it. Needless to say it only held 10 gallons till it was at the top of the valve covers, and he tried to crank it.   You can never tell what the clueless might do 

There are two seals between the trans and T-case,
one onhte back of the trans, and one at the input
to the case, the space in between those two is a
dry area, no oil or ATF should be in there, problem
is it would be a PITA to split them just to find out.

Okay, got some new gear oil and filled the t-case up to the fill plug today.  It sat all night with both plugs out so it would be as drained as possible.  No larger amounts of fluid in the pan on the floor or anything, looked about the same as yesterday.  Still the mystery...I think ATF...fluid.

Drove it down the road for about 15 minutes and it's shifting a bit funky.  That first shift from first to second is always a bit soft and hesitant in the morning or after sitting and cooling for many hours.  I've put that up to the half red,  half brown color of the ATF and figured I'll do a pan drop pretty soon.  95% of the time after that first shift it goes along great and shifts normally.  Sometimes it shifts screwy at the next 1st-2nd but by far it does not.
This time it's does the usual weird first shift but then something else.  I get up to about where I think 50-55 is and it should be about to go into 3rd gear, at least from how it's been shifting before.  Well, now the thing shifts, the rpms go down, I get up to around 55mph, and then whoom I loose revs and it doesn't seem to want to go much faster. ???  I'm going about 55mph and it's chugging along around 2800rpm.

Do this several times to verify it's repeatable and head back to the garage.  Following the FSM procedure I check the trans fluid with the engine running and the vehicle in park.  Now I barely have any ATF on the dipstick!  Just a little bit on the bottom of it, not even to the bottom cold line...

I figure, "damn, it's gone into the t-case."

Nope, I open up the fill plug and a bit of what looks like warm, froathed up gear lube comes out...I figure it should look like that.  Kinda milky brown and froathy...it's got other stuff in there with it and it came off the road like 3 minutes before...right?
I figure the bit coming out the fill hole is from the stuff expanding from the heat of the t-case gears while moving.  Okay, so I pull the drain plug and about 1.8 quarts of warm, brown and milky looking stuff that smells like gear lube.  No real trace of ATF other than the stuff maybe being a bit contaminated by whatever was in there before.

This is why I like manual transmissions...

Thoughts?

Well on the last tracker I got i did a fluid changes as well and the T-case was dry when I pulled the plugs. I drainged the tranny (manual) and everything was cool. The car needed a clutch so I started spliting  the driveline apart and when i split the Tranny and T-case it was full of gear oil in that dead section. It the first and only case I have ever seen where the internal seals leaked. Maybe just maybe the a similar problem is happening to you and the transmission is leaking out the output seal filling the dead space and filling up the T-case. ATF is still oil so I don't know if it would turn the gear oil milky or if it would just mix in. I think ATF is a 10 weight oil like PS fluid..

Good luck with that!

Filled the t-case back up and drove it around for about 20 minutes for a second time.  Did the usual goofy first shift but after that was pretty sound and got up to 70mph like always.  Slow but it got there.

Now, here's the weird part.  I did the auto trans fluid check just like the FSM says.  Drive around for approx 20 minutes, stop, park, shift through the ranges staying in each about 3 seconds, back to park, and then idle it for 3 minutes before checking the fluid with the engine idling.  Each time I've checked it using this method I have just a bit on the bottom of the dipstick.  Maybe up to the bottom cold line.

I turned it off and let it cool for a few hours after the first check and checked it again, this time with everything off after sitting and cooling.  Whammo, once again I've got more ATF than I should, it's past the blade portion of the dipstick and at the bottom of the "coil" part of it.

Drive it again, check the ATF with the engine idling per the FSM procedure and once again it's showing low.

Turn it off, let it sit for a few minutes, and check the stuff again with the engine still off.  Now it's half way up the dipstick...?

What am I missing.  When it's off and cold and should be around the bottom of the dipstick I get a high reading.  When it's warm and running and should be high up on the dipstick I get a low reading...wtf?  Am I doing something wrong with my check procedures?

I just add fluid when the trans acts funny, I
throw in a half quart, and see how it is, or I
add teh whole quart, never seems to over flow
and the trans has lots of miles on it, so I would
fill it so it's showing on the stick when running
warm.

I'm going to drive it some and see how it goes.  I think the pan drop and filter change just moved to my "sooner" list.

I'd still like to know why the levels have reversed from what is expected...

I think it was just low as wild said.  I added about 2/3 of a quart and test drove it.  Seemed to shift a little better.  I'll do some more checking tomorrow.

when it's running it fills your torque converter all the way up, when you shut it off some of the oil from the converter leaks out and goes into the oil pan, that is normal.

Yeah...I was reading the FSM wrong.  Need to pay closer attention.

It's still slipping at the first 1-2 shift each time I drive it after it sits but other than that so far, so good.  It's got a fluid and filter change coming.

well.....how did it work out for you?? new output seal on the trans?? im having a similar issue with atf in my t-case...but it was only a little bit overfull

well, upon further consideration, i think that the people that owned the tracked before me must have had atf put into the t-case instead of gear lube....mine was only dribbling out when i removed my fill plug....and i have never lost any trans fluid....i have never changed the t-case fluid since ive owned it, so my guess is that the previous owners had put the wrong stuff in?? ive also always had a bit of a grind noise while shifting into 4lo, but it is now gone since ive changed to the prper lube