As always Duncan, thanks man. You always come in clutch.
Ok so I removed and reinstalled #1 a few times. After looking through the service manual I found out this was the actuator that is fed from the reservoir in the boot as you mentioned through a few hoses and a high pressure one. When I removed it, there was no gasket. Once I looked into it and through the forums I saw the actuator has a built in gasket in the actuator itself.
Side question: the metal rod in there. Is there a specific way it goes? It's rounded on both sides and I'm sure it's what the actuator pushes on to engage the transfer case to transfer the torque to the front wheels.
In regards to #2, the threaded fitting and angle seat. Which is this? Is this what connects to the actuator itself? If it is a line that connects to the actuator, I never undid it but I can double check it's tight, it could have come loose when I unbolted the 2 bolts off the actuator that connects it to the transfer case those couple times.
You are right, luckily both are accessible and don't require me to drop the trans or anything crazy. I need to make some time this weekend to knock it out.
Again I appreciate the help.