Stared hearing a grinding & squealing noise which kept coming and going up & down hills.

And you kept on driving.

Wonder why you trashed the rear end,simply stopping when 1st heard could have saved thousands in repair bills.

Problem these days that people just keep driving when a strange noise appears and just wait for the major failure that will ensue.

In the middle of a junkyard replacement myself. Actually Craigslist came through just in time. $200 and he gave me a bunch of extra parts. Read up on the differences between years. Newer ones have 2 speed sensor, older only one.

How many miles on the clock for these lock ups? At 200k I'll be checking my backlash...

My brother's rear end went at 110K. I am still good at 140K.

Here is an interesting find from putting in the new rear axle. The replacement axle came from a 2007 Liberty. After installation when pushing the button to turn off overdrive the transmission only drops one gear now. My brother took it in to his dealer to check out the situation and they determined that the sensor on the rear axle must be different in the gas Liberty and only drops the tranny one gear. This means that he is running in 4th gear instead of 3rd with the overdrive off button pushed. This seems to be a much better scenario for towing & pulling when a little more rpm's are necessary. I hate on mine when you disengage overdrive on the highway and the tach is looking at 3500rpms or greater. Now upon disengaging overdrive my brother gets about 500rpm increase.

Here is an interesting find from putting in the new rear axle. The replacement axle came from a 2007 Liberty. After installation when pushing the button to turn off overdrive the transmission only drops one gear now. My brother took it in to his dealer to check out the situation and they determined that the sensor on the rear axle must be different in the gas Liberty and only drops the tranny one gear. This means that he is running in 4th gear instead of 3rd with the overdrive off button pushed. This seems to be a much better scenario for towing & pulling when a little more rpm's are necessary. I hate on mine when you disengage overdrive on the highway and the tach is looking at 3500rpms or greater. Now upon disengaging overdrive my brother gets about 500rpm increase.

That's what I thought also. His friend is the service manager at the CDJR dealership. The manager said the signal is taken from the speed sensor on the rear axle.

I believe the axle came from a liberty with an automatic and the gas engines only came with a 4A. Maybe the sensor for the 4 speed is different than the 5A and sends a different signal for the TCM to drop 1 gear. Seems strange to me also but it is a great option.

You are correct, I should have said 2 sensors as it is a 4 channel ABS system. My '05 has only 1 rear sensor. I don't know how the TCM picks up the vehicle speed based on the ABS sensors but I remember the old days when it was cable in the rear of the tranny. For whatever reason it has changed in his CRD and now only increases about half the rpm's then it used to.