Ok. I think i can confirm on my own that the 207 rear housing wont work (with out mod) on a 231. The bearing (as seen in the picture) is installed all the way (near as i can tell now that ive pulled the bearing housing).
So, i will be waiting on the housing Bounty shipped.
Getting to look inside, i think i can see whats going on now. As much as i hate to admit it, i think i put the water in the tcase (the few oz's that drained out originally).
When i first got this jeep, i had to pull it into the garage. And, well i had to take a couple laps in the snow first. Going in reverse in 2-3ft deep snow, with a destroyed rear seal would most likely put snow in there. You will notice in this pic, the orange color around where the rear output bearing would be.
Thats exactly as Sharpy suggested. Rust. But upon further inspection, the inside looks amazing, the rust trail goes no farther. No rust on anything. There is some decent condensation on the ceiling of the inside of the tcase. What water is condensating in there, is beading up very well. And i cant find any evidence of a long presence of water. So my guess is, i packed the tail shaft with snow, as well the bearing, and parked it. As she sat, she rusted up a bit.
Also, there is or was no milky oil to indicate a thorough mixing of water with the innerds.
I have my heat gun blowing inside the tcase right now to evap the rest of the water condensation, while im taking a break.
I will put about 5 minutes of 4L time on the tcase once i get her rolling, and change the fluid again. And inspect the old fluid.