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Transmission or a drive shaft making a noise

Vehicle: 2006 envoy Denali 5.3
related to an answer for: What is C0300?

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C0300 Rear speed sensor malfunction

When this code occurs all the shift to auto is disabled and the adapt mode is disabled you would would have the service 4wd indicator on. this sensor is on the  transfer case, in so many cases its a mechanical fault that set this code, when you remove the sensor, if there is metal filling on the sensor you have  a mechanical condition, what hapens is  the oil in the transfer case tends to dissipate, leaving the transfer case empty

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