Starting a build/repair

I have a 98 XJ 4.0 4x4 Sport. I drove this from about 2001 to around 2012 then I parked it. The main reason I stopped driving it was because the axle was going bad. I needed a more reliable car for work. I drove it around the yard every few months until it wouldn't crank. I finally changed the fuel pump about 3 weeks ago and got it to run again after that. I have also replaced the battery. It sports a 3" Rusty's lift I put on around 2002. I have 1000's of questions but the few I am wondering right now are:

1. How to diagnose what is broken in the rear axle. There is a bad grinding noise, the metal shavings, and it sometimes binds up just driving around the yard. I can get an axle with a 90 day warranty for around $350 with a swap out. I would like to be able to run 33" eventually but to keep costs low, I will probably still run 31's. I will probably go ahead and replace the leaf springs and shocks at the same time. To have a road ready, capable trail rig, what should I do?

2. What are some other things I should look at changing because it has been sitting up so long? I am assuming most fluids need to be changed and/or flushed. Gas tank was drained and cleaned with pump replacement. I was told many years ago a wheel bearing on the front was going bad. There are some definite squeaks and grinding noises.

3. My battery is a group size 34 and is slightly longer than the current battery tray. It sticks up just enough to keep the hood from closing. Where do I find a tray to fit that size?

4. There was a slight bit of white smoke that seemed to come from the rear of the engine, near the firewall. Could that be old residue burning off or something worse?

Thanks for reading through all of this, I am open to any advise and opinions!!! I am looking forward to getting this thing back on the trails. It won't be an overnight project but is anything ever easy on a Jeep?:us:

If you get a 8.25 axel (you may already have one in a 98) that should be cheap and strong enough for what you want to do. I wouldn't try rebuilding unless you have experience with it, it's just too tricky

I welded in a ford 8.8 from a 02 explorer I think it was. there is a kit for it as well. You can get those with factory locking . I went that rout for the 3.73 ratio my 85 has.

Far as I know there is only one size battery tray for the XJ. But there might be a upgrade I don't know of.

Front Wheel bearing is a fairly easy to replace, I have non abs and used precision 523084, I think. I got them for under $50 each a few years ago. Have at least 20 to 30 k on them since.

The smoke I'd bet is just something burning off, maybe even a mouse nest or two under there.

Um, you might pull the covers on the front axel to make sure the grinding is only the bearings, if it leaked out enough oil (as they tend to do) maybe the gears ate themselves.
But I'd do general maintenance, tune up and fluid changes all round like transfer case and transmission.
Bound to find more as you go through it but that's all I can think of off the top of my head



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Take a look at the battery trays from Dirtbound: http://www.dirtboundoffroad.com/jeep-cherokee-xj/accessories/battery-trays.html

I expect their universal one will do what you want, but it doesn't actually say what size battery it will fit. It might be best to contact them first just to make sure. The Optima tray is a Group 34, but of a specific manufacture. It would make one think the universal should fit a 34 too, but still probably best to check first.