NP231 rebuild question

I picked up an NP231J from a 96 Jeep (not sure which model) the other day and its in need of some work. When I pull on the rear output shaft it moves in and out about 1/8in or so, which according to Andy at the Carolina Rock Shop, is not normal. What could be responsible for this? I've never torn in to a transfer case before so I'm not sure what to look for to fix this.

About all that ever happens to these t-cases is the plastic pads on the shift and mode fork wear out, the two output shaft bearings can wear out, and the chain can stretch. If you're unsure about it, just tear it apart and take a look, it's pretty easy.

Could be a snap ring that broke. I had that problem on my 242. There shouldn't be any in/out movement on it.