I have the Audi CV axle tool in my tool box...those VW half shafts sure are fun (NOT) There is a reason I work on these Fords...they have earned our respect!
Easy test: Remove front D shaft, is the noise still there?
for the VW - you have to have the right triple square socket and make sure that the bolt head is completely cleaned out and the triple square fully seated or you will strip out the bolt head. Initially I had cheap tools before I finally had to money to get better stuff.
for the front drive shaft - I saw another thread here, where they got into an argument that driving the XLT with the front drive shaft removed would damage the 4WD. So I'm hesitant to do that. Also even with the driveshaft removed doesn't the half shaft still turn some of the gears in the differential? and since I found the differential had about half the gear oil in it that it should then I don't even trust that any of the gearing is not worn out.
I've been looking over my maintenance records (and I've started to remember more details on the suv). I had heard this noise 20K miles ago and replace both front axles/half shafts thinking that might be the issue (simple, cheap attempt to fix the problem) and that had no effect on the noise. The front drive shaft was replaced by ford 10K ago (i was out of town at the time -OUCH). and I know that some time since 2004 I replaced one wheel hub, I just can't find it in my records.
So most of the front drive train is new which narrows down the issue. And when I found that the differential was only about half full, after the shop said that the noise was coming from there. I'm pretty confident that it is the differential.
And just as a PS going back over my records, I've replace both upper and lower control arms on both sides. Inner and outer tie rods on both sides, sway bar links on both side and sway bar bushings, new ball joint both sides. new shocks, all in the last 3 years and new rotors and pads 4 years ago. So seeing all the work that I've already done, throwing another $200 for a low mileage used front differential and about a days worth of labor due to the rust up here is just a no brainer. (plus It will be one new thing that I haven't done on a car before -what's the use of having tools if you are not goign to use them).
Thanks for the help
Steve