transfer case issues

[smileynialley]

Ok guys, I recently posted on here about having a problem with a recurring leak from the rear output seal on the transfer case.
The hummer has been sent back to the "dealer" where i purchased it twice now and both times the leak has returned.
This time, i've taken the truck to a friend of mine who has had a look at it and found some issues.
1) the prop shaft has a few dents/gouges in the end which goes into the transfer case (4 in total including a very deep one) It also had 2 black rubber O rings pushed up against the seal from the outside, The end of the shaft has been cleaned up with a wire brush which means the garage who have been working on it have seen the dents and tried to hide it, then ignored it:


2) the seal that was taken off (the right one) looks nothing like the replacement i ordered (the left one) using the exact GM part number. The seal taken off looks damaged and has poor sealing qualities and is mainly a dust cover, i think this is an after market generic seal they have tried to use to fix the leak:


3) The bearing from inside the transfer case came out with the prop shaft when it was removed. Apparently this is supposed to be secured inside the transfer case and shouldn't be removable without taking the case apart. It also looks rather primative to be a bearing used in a transfer case(assuming it's the correct part):


On the lip of the inside of the transfer case output seal, is severe damage. My guess is that to remove to original seal, someone has drilled through it and gone too far, drilling straight through the transfer case.
There is also a large ring of white stuff inside the case, where the bearing above was sitting in. I have no idea if this stuff is original (doesn't look like it) and if it's doing what it's supposed to.


Now, my guess is when the truck went in the first time to be repaired, the garage has taken the transfer case off, opened it up and bodged a repair to the bearing with this white stuff. They removed the original seal by drilling it out and damaging the case. Then used an after market wrong seal on the end of the output shaft. Then when the car leaked again a few months later, they used 2 rubber O rings to temporarily fix the leak.
What i can't figure out is what caused the dents/gauges to the prop shaft as they do not go the whole way around the shaft which would indicated wear.

Some help on this would be great as it's near impossible to get a new transfer case over here.
thanks
Niall