Two problems related to transfer case have been reported for the 2001 Jeep Wrangler. The most recently reported issues are listed below.
I have a 2001 Jeep Wrangler with only 89,000 miles. The entire frame and undercarriage is rusted out and the transfer case has fallen off. I'm unable to drive it is so unsafe!! I can not believe that a vehicle only 15 years old would be in this condition!! I will be getting an attorney!! apparently there is not proper holes for drainage in the frame and it has caused the water to pool and rust out the frame. I still owe $6000 on this vehicle! I will never buy a Jeep again! I called Chrysler and because it's so far out of warranty and no recalls they are unwilling to do anything for me. . . Ugh.
Transmission makes a grinding noise when in neutral and clutch let out. Dealer checked for running rough and found that flash for computer was not available. Once flash was available, brought in Jeep for flash and manufacturer replaced transfer case shift rod, per TSB. Grinding noise was not fixed, pointed it out and dealer told me that was how this model and year sounds. Brought it back around 13,000 miles and dealer determined that a new transmission was needed. Ordered and replaced standard 5 speed transmission. Seemed to fix problem, although there is still just a slight sound which dealer said was normal.