OKay dudes, dont forget that water can get into the tranny/t case/front and rear diffs if the truck sits in deep water. The seals in the drivetrain are made to keep fluids in, not water out.
I believe the reason Ford has the vent tube leaving the tranny and going up towards the back of the engines intake, then back down towards the ground is for tranny boil over, in case this happens or you overfill the tranny the ATF will dump on the ground. But I am not sure about this, anybody else know why it is routed this way?
The stupid vent tube also clips into the same bracket that holds the wires for the 02 sensors. This bracket bolts to the top of the tranny bellhousing/engine in the same spor as the tranny dip stick tab. You can access these bolts with a socket or wrench from under the hood, behind the upper intake if youdont want to drop the tranny x member (people with Skyjacker crossbars have a harder job ahead of them to drop the tranny/t case)
I used some rubber hose and went from my T case vent tube to the transmission vent tube and attached them together with a T fitting and hose clamps. then the hose goes up under the hood (avoiding the exhaust/suspension) and up the firewall right near where the brake booster is. Then a cheapo small air filter sits on top of the vent line.
It is possible to include the vent tube for the front diff into the same line with another T fitting, but I routed mine seperate (along with the ARB air hose) because it just fit better on my BII with the amount of travel I get from the front end I didnt want to bu pulling on the tranny/t case vent too.
the rear diff is vented up near the fuel door too.
These modifications tothe cheapo stock vent system will really help, but they will not stop water from getting in....
If you sit in deep water (not moving) for long enough, water will work its way onto everything.
Engine oil, tranny fluid, t case, and front and rear difffs must be changed. Also the tranny should be backflushed to get the water out of the valve body and converter.......
(dont drive it! till this is done)