With the dash opened up on my 1996 GMC Sonoma, some of the HVAC vacuum lines can be seen. The roundish looking thing with the silver lever sticking out of it is the defroster actuator. When vacuum is applied to the blue hose, the arm pulls open the defroster vent door and air is directed to the defrost vent.
These doors direct warm or cool air into certain vents inside the cab. The doors are controlled by vacuum-driven actuators which move them back and forth in various directions. Vacuum is also used to engage an actuator which pulls on a cable that locks the front axles on four wheel drive vehicles. The activation is triggered by linkage inside the transfer case, which upon engagement of the transfer case, opens a vacuum passage that supplies vacuum to the actuator that pulls the cable that locks the front axles (got that?). The vacuum passage opens and closes by way of a 3-pronged vacuum switch that sits on top of the transfer case. Seals inside the switch keep the fluid inside the transfer case out of the vacuum lines.
However, it's possible for the transfer case to "over-fill" itself with fluid. How? The junction of the transfer case and the transmission contains a seal, which is supposed to prevent the automatic transmission fluid (ATF) inside the transmission from making its way into the transfer case. These seals can fail over time. When that happens, ATF from the transmission will leak into the transfer case. The transfer case is not supposed to be completely full of ATF (the transfer case also uses ATF for fluid). When it does get full, ATF can push its way past the vacuum switch and into the rubber vacuum lines that connect to the switch. Once the fluid makes its way into the lines, vacuum sucks the fluid all through the vacuum system. This is bad. The reason it’s bad is because ATF and HVAC actuators do not play well together. The rubber parts get soft and don’t seal vacuum well. Fluid begins to leak into unsightly places. Over longer periods of time, the transmission fluid level will drop. None of this is good.
After many years, GM engineers apparently caught on to what had to have been an odd correlation between the ordering of replacement vacuum actuators and transfer case vacuum switches at the same time. The exact date of recognition is unknown, but (supposedly) the switch has now been redesigned so that fluid won’t get past it (or at least not as easily). Unfortunately for the tens of thousands of us who own S-series vehicles with the old transfer case switches, we must deal with the consequences when the transfer case input shaft seal fails.
Those consequences usually include some or all of the following:
Noticeable hissing in the HVAC controller on the dash
A leak in the HVAC system can happen in several places behind the dash. Most often, the hiss sounds like it's coming from behind the HVAC control selector. For anyone not familiar with the transfer case switch situation, the diagnosis might be a bad HVAC control unit. Replacing the $150 unit might fix the issue for a short time, or maybe not at all.
Loss of HVAC functions
Transmission fluid tends to weaken the rubber diaphragms inside the actuators, which along with age, may cause a rupture of the diaphragm and loss of vacuum control. The hissing may be the sound of air being sucked through holes in the diaphragm. As the ruptures grow, eventually the vehicle’s vacuum capacity won't be sufficient to move the actuator arms. When that happens, the HVAC system will seem to have a mind of its own. Air will come from different vents than what is indicated on the control knob, or no air will come at all in certain settings. The control knob itself will seem to move from setting to setting with too much ease.
Transmission fluid in the ash tray (yes…the ash tray)
This, the strangest phenomenon, is caused by fluid making its way to small, multi-colored vacuum lines connected to the HVAC controller. The control knob just happens to be located directly above the ashtray. Leaky fluid conveniently drops straight down into the ash tray, instead of your carpet, which is kind of nice.
Drop in Transmission Fluid Level
When the transfer case input shaft seal fails, ATF moves from the transmission to the transfer case. The transfer case fills up with excess fluid, which depletes the ATF in the transmission. The transmission fluid dipstick may not show much of a drop in fluid level over short periods of time, but eventually you'll see noticeably lower fluid levels.
One thing to keep in mind, however, is that over time, a bad input shaft seal will continuously over-fill the transfer case with ATF. This will probably "test" the transfer case vacuum switch, as its seals are tasked with keeping ATF out of the vacuum lines. So replacing only the vacuum switch and not the input shaft seal will possibly bring you back to the same problem again.
An easy way to check the transfer case input shaft seal is to check for excess ATF in the transfer case. Simply unscrew the filler hole (upper bolt) at the back of the transfer case: