no-one appears to have mentioned it, but you likely have an NP/NV231 or NP/NV242 transfer case. There are only a couple variations used on the KJs, and most of the gas models have the first one. To be sure, find the ID tag on the back of the case (usually to the left of the rear output shaft) and clean/read it. Command-trac refers to the series of transfer cases that have 4HI/2Hi/Neutral/4Lo option (i.e. the 231). Selectrac refers to the family of cases that added a center differential for a "full-time-4wd" option (i.e. i.e 242).
Assuming you're correct in your diagnosis, knowing which case it is makes all the difference. The "output shaft seal" is what you want, I believe, and depending on the model, should be pretty easy to remove and replace. Not sure if you need to slide the seal off the shaft or the other way around. It might depend on what's covered up by that boot (i.e. can you remove the slip-yoke from the shaft to allow the seal to slide off).
Here's what a tag looks like:

Dan
I know for a fact I have the 231 t-case. Now I'm just wondering how hard it is to replace the seal. I'm hoping it's what you said with just removing the slip yoke and sliding the seal off. i asked one of the techs at work what they thought (I work at pepboys) and he said I need to rebuild the t-case or buy another (wtf?)