Hi Shayne. I've parked this one at the moment. I am convinced that my problem is either excess backlash at the front diff or a problem with the transfer box or both.
I actually bought a second-hand transfer box, intending to fit it and see. However, despite working fine at the time I bought it I seem to have forced the transfer lever too far forward somehow so, while it shifts happily between L and H, the diff lock is stuck in locked. I'm in the process of stripping it and found that it looks pretty yucky inside (honestly do people not realise you have to change the ****ing oil!?

), although all the bearings seem ok in my inexperienced judgement. If I successfully get it back together (big if

) I may try putting it on to replace mine, at least just to test (and to prevent it just being an expensive reason to make a flange-holder-tool and buy a 1/2" breaker bar and 30mm socket). Incidentally, removing the staked nuts on the flanges was made a lot easier by having a 7' long scaffold pole available. Even then it took some muscle.
However, with the 'new' TC's centre diff locked (whether I want it or not

) on the bench, the difference between the backlash of the two output flanges is exactly the same as mine. This leads me to think that mine is probably ok and that the problem is actually the front diff having excessive backlash...
On my vehicle, there is a certain amount more backlash at the front diff flange than there is at the rear diff flange. I don't know whether that is just to be expected? There is bound to be a bit of extra movement in the front drive shafts compared with the rear half shafts.
Until I recover my enthusiasm (or find a known good, cheap 4.1:1 R16 front diff) I'm in the BobMurphy position of just living with it as I have for the past two years. I've just today put thicker (85/140) oil in the front diff to see if that softens the shunt as suggested by StarCruiser. I don't know if it will work and haven't given it a good road test yet (though I gather it's usually a fix for
noisy worn components not slack ones).
Apologies for the essay, but you did ask!