I have a 2000 chevy 1500 z71. The rear end is making a clanking noise when I accelerate. Once I get up to about 50mph It acts like it doesn't know what gear it needs to be in.

Yes, differential.

Are you saying your diff. went BANG!!!!!

8 lug.

Accelleration noises of the magnitude you descibe makes me think the engines crank shaft bearings have gone. Has the oil pressure light come on recently and what's the oil level like.
Without being there to hear it, it's very difficult to diagnose. You should detect noises and rattle if you rev it when in neutral if it is the engine. If the engine is smooth in neutral and the oil is good you may have a bad diff or cv joint

the transfer case only engages when in 4wd. check the universal joint, it connects from the drive shaft to the rear differential. it may need grease or to be replaced.

Sounds like a U-Joint. If you can wiggle the driveshaft any at all its a worn u-joint. There are two, one at each end of the driveshaft. Good luck.

i'd say go with what your owners manual recommends for best durability.

sounds serious but without hearing the noise its difficult to diagnose ,ask a local mechanic to have a listen and then post what he said so any mechanic might be able to help or verify

Check the front wheel bearing assembleys.

This sounds like the famous problem that those ten bolts give, remove the rear differential cover and inspect the oil for metal debris, it's more than likely to be the carrier bearings wornout making the ring and pinion offmesh causing the grinding and will eventually break. Hope this helps