[Porsche-O-Phile]

Shoot, I'd try to find one at a junkyard and swap the sucker out.

Back when I had my truck (this is years ago) I had a problem with the thing refusing to shift into 4WD, which I wanted for Chicago winter. One less-than-scrupulous mechanic said the xfer case was bad and it would have been a lot of $$$ to fix. Took it to another shop and they diagnosed a "thermal switch" or some such thingy that controls the engagement/disengagement mechanism. $200-or-so later and it was working fine. They got 100% of my business from then on for simply being honest.

I'd get a second opinion. The transfer cases themselves are pretty bulletproof unless you physically crack the case open.