Friday I got on the truck a bit, and noticed a clunking in the 205. It goes away if I pull it into 4 high (locked). There are 9 second trucks running stock 205's so I am feeling pretty badly about dinging mine with a whole lot less power.
Any ideas what could be wrong?

 

I think from what you discribe sounds alot like what my truck was doing. I think I have a diferent T case than you but the synptoms sound the same. Here is a link to my post it may give you your answer.

https://www.dieseltruckresource.com/...d.php?t=185405

 

I don't know what to say about that. I've had lots of those 205s in old fords and chevys and they are nothing short of bullet proof. I've put them through hell and never had a problem but the linkage is (or was on all of mine) kind of a mickey mouse deal. I think it could make that sound if the linkage was out of adjustment or the mounting brackets were wore out. I've seen that before.