Transmission/Transfer case sounds

Hi all,
1990 Suburban V1500 4x4 woes again...
After getting the EGR situation taken care of, now I have develpoed a sound in either the transmission, or in the transfer case.
The sound is ONLY present in first gear (automatic), but when it shifts into second, the noise is gone.
It almost sounds as if it is the u-joint on the rear shaft, but the noise would be present through all gears if it was. The shaft/joints seem tight when turning it in the direction it is supposed to turn, but if I reverse the direction of manually turning it, it moves with ease.
Could this be one of two things?
1.) The 1st gear band in the transmission is shot.
2.) The transfer case is getting ready to die.
I'd hate to have this thing die out in the middle of nowhere, so any thoughts on this would be graciously appreciated.

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