Little info first. Bought this 1979 K5 Blazer as a toy about year ago. It has a 350 with Dart Iron Eagle heads, quadrajet carb, 350turbo tranny with a NP 203 transfer case with the part-time conversion sitting on 36's and a 4" lift. It had some engine issues ( a lifter needed replaced general tune up needed) so I parked it to tinker on when I felt like it. Daily driver got repo-ed so I did the work to make it my daily driver about a month and a half ago. So about 2 weeks ago I was leaving the store and when I shifted from reverse to drive there was a quick ( about a sec) but loud grind noise. I assumed it was my transfer case. I only lived about 6-7 blocks ( which it drove with absolutely no noise or problems) so as soon as I got home I checked my trans fluid which was fine. There was a small puddle of what looked like engine oil next morning (which it does leak oil a bit from around the timing chain gasket) so I didn't think anything about it. I continued driving it like normal (small trips of usually less than a few miles) and it would occasionally make that small grinding it always shifting from reverse to drive. Here lies the true problem. I went to make a quick run to grab something to eat and got about a block from my house when it suddenly made a small grinding noise and acted like I stomped on the brakes. Besides completely freaking out my 15year old, I let it coast a bit gave it a little gas and it started forward like normal, for about 25-50 feet before doing it again. Thought it must be my transfer case that was leaking and out of fluid. Best way to explain it is like I shifted the transfer case from Hi to Low. So I put it in 4wd, locked the hubs and limped it home with no change. Pulled the plug on the transfer case to check the fluid level and it's still full. The transmission doesn't have a history of shifting rough or late, have whinning noises or anything other than the usual "Chevy hard shift into gear" that every chevy I ever owned did. Really scratching my head here on whats going on but hope someone here can point me in the right direction.