"watery grease" leaking from front right axle

SOURCE: Front Right Tire Making Bad Rattleing Sound

Chrysler products as a whole are not well known for quality front end components ( I own one ) I would check the upper and lower ball joints and tie rod ends for worn or damaged parts. If no satisfaction here consider returning to where it was repaired and have them re-inspect thier work. All of us in the industry do are best but none are perfect.

SOURCE: Jeep GC axle oil change

undo the lower plug on your diff housing,drain tighten plug up, undo top plug fill til overflow,same as front,oil refer to owners manual or call local service centre

SOURCE: 1995 Jeep Grand Cherokee noise problem!

Ok here is how it is simplified. If you have ruled out the front diif and the wheel hub,
The answer is the Viscous Coupling in the transfer case unit its self. these do wear out over time and not uncommon for this to happend eventualy. the short term answer is to replace the transfer cas or have the transfer case rebuilt

A viscous coupling is made up of alternating circular plates. The plates have tabs or perforations in them. The plates are mounted in a sealed drum, and are located very close to each other. The drum is filled with silicone, or some dilatant fluid. When the two sets of plates are rotating in unison, the fluid stays cool and remains in a liquid state. When the plates start rotating at two different speeds, the shear effect of the tabs or perforations on the fluid will cause it to heat up and solidify (Silicone when heated will turn into a near solid; the viscosity of dilatant fluids rapidly increases with shear). The fluid in this state will essentially glue the plates together and transmit power from one set of plates to the other. The size of the tabs or perforations on the plates, along with the number of plates and fluid used will determine the strength and onset of when this mechanical transfer will happen.
Viscous couplings are used as the center differential in some 4WD/AWD vehicles such as the Toyota Celica GT-Four, and also as a limited slip differential (LSD) in rear axles.
http://en.wikipedia.org/wiki/Viscous_coupling_unit


Quadra-Trac
The Quadra-Trac name is used on a variety of full-time 4WD systems. The first version was launched in 1973, with a new unrelated system used in the 1980s. Yet another system carried the name in the 1990s.
Quadra-Trac was the trade name for the Borg-Warner 1305 and 1339 gear case. It was a chain-drive system introduced in 1973 on the full-sized jeep line which included the Wagoneer, Cherokee, and trucks behind the AMC-specific Turbo-Hydramatic 400 automatic transmission. CJ7's also received the Quadra-trac. This system included a differential to shift torque between front and rear which could be locked with vacuum. The 1305 lacked a low-range, while the 1339 offered an optional 2.57 planetary gear. A Quadratrac transfer case can be upgraded from a non low range equipped unit to having low range by swapping in the optional planetary housing and shift rod and floor shifter assembly from another transfer case. Consult a factory service manual for service procedures.
The Jeep Quadra-Trac was differentiated from the open New Process Gear NP203 used by Dodge, General Motors, and Ford in that it included a center limited slip differential feature, in this case a clutch pack.
The part-time case available in these vehicle at this time was the Dana 20.
Applications:

• Jeep Wagoneer 1973–1979
• Jeep Cherokee 1973–1979
• Jeep Pick-up 1973–1979
• Jeep CJ-7 1976–1979

The Borg-Warner system was replaced with a New Process Gear NP219-based chain-driven system in 1980 [1]. Applications:

• Jeep Wrangler 1987
• Jeep Cherokee (XJ) 1984–1987

The NP229-based system New Process Gear was replaced with a New Venture Gear NV249-based chain-driven system in 1996.
The NP249/NV249 utilizes a "Viscous Coupler" to determine power transfer between the front and rear axles. The goal of this device is to provide smooth and efficient 4WD operation on dry surfaces--if a differential in speed occurs between the axles, heat buildup in the viscous coupler transfers power to the slower axle, providing some traction in off road conditions.
1993-1995 NP249 transfer cases used the viscous coupler to transfer power in both high and low ranges.
1996-1998 NV249 transfer cases had a low-lock capability, meaning a hard gear transferred power in 4LO (front and rear drive shafts are locked at same speed in low range).
Applications:

• Jeep Grand Cherokee (ZJ) 1993–1998

SOURCE: 01 jeep grand cherokee right rear axle, new

Do it again and be really careful to get the seal in dead square. Put a thin layer of silicone glue around the outside of the seal housing, on some difficult ones that leak, you can put silicone inside the cavity where the tension spring is to give a bit more pressure on the axle (let that dry before using) and, make sure you wipe a bit of grease on the axle where the seal rides so it cant run dry before lube reaches it. One or more of these items have got to work...I've used them all and they all have worked.

SOURCE: 2000 jeep GC limited front axle problems

First thing to test is to see if the front driveshaft is getting engaged from the transfer case. With the vehicle in 4x4, and engine shut off, and in park, crawl under and try to turn the front driveshaft by hand. The driveshaft looks like a pipe that runs from the transfer case, located just behind the engine/transmission, to the front differential. If it rotates by hand, there is a problem with the transfer case. Some Jeeps have a vacuum actuator on the front diff that slides a collar inside the axle tube to engage it. I will watch for you findings, and you can leave me another message, and I will be happy to chat back with you on your findings.