SOURCE: awd 97 ford explorer grinding noise going forward
I ran into this problem, and discovered that i had a faulty front shaft speed sensor. The grinding I had was that the transfer case clutch packs were trying to lock up and engage the front wheel drive. Replacesment of the sensor has not fully rectified the situation though, as it still does it intermittently. It seems to do it at low speed turns and on acceleration. Not sure if this is your problem or not, but it could be. A scan of the computer can tell you if it is the issue though.
SOURCE: have a 97 tahoe when put in reverse transfer case
There is a snap ring at the back of the transfer case that breaks. It can be fixed without removing the transfer case. Remove the rear driveline and the small housing at the back of the case. The snap ring holds the bearing in place.
SOURCE: my 97 tahoe will not
Inside this type of transmission reverse is applied with a special clutch band, that band is usually the first thing to wear out in any automatic transmission, no reverse is a very common failure and I see it often on FixYa, the only solution is to overhaul the transmission, since replacing the reverse band requires the transmission be completely disassembled.
SOURCE: manual trans in a 97
This possibly an issue with a damaged gear synchro or your linkage needs adjusting. This is a video that explains in detail how to adjust your shift linkage and it should cover your model and year of vw. If the problem still persists then you could be looking at the bad gear and will need to have the transmission serviced.
http://www.youtube.com/watch?v=tp9ggefOjAE
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