1st Gen 4WD 4X4 4WD Actuator Question

Yo Forum!
I have a couple of questions about the 4WD actuator on my '02. Back story---->Last winter when I would click the button to go in and out of 4x4, sometimes it would work and sometimes it wouldn't (thankfully it worked more than it didn't). When it didn't shift, sometimes the light on the dash would blink. Obviously, I hit the forums/YouTube University, and I'm finally getting around to working on it now.
When I opened mine up it had a lot of moisture, spent grease, and one contact with a good amount of corrosion. Kinda can't believe it was working at all!

I cleaned it all up (sanded down the contacts) and put on some new dielectric grease. So, I guess my first question is -> Is there any reason why I shouldn't use some gasket maker stuff to seal these parts together better (pic #2)? My first assumption was that moisture was getting in from the outside. That being said, I'm not sure if/when the last time this thing was opened up, but it also seems like they create their own moisture somehow??? I took it on a quick test drive after reassembly (NO rain/creek crossings), opened it back up, and there was already new moisture building up inside.

Moving along to my 2rd question/pic...Where would all the moisture from such a quick test-drive be coming from? There was no external rain/creek crossing...Along the same lines of moisture/venting...What is this little hose for? It was all cracked at the end and ready to fall off. I cut it a little bit shorter (into some good material) and stuffed it back on. Seems like it ports up to top of diff/transmission...I'm not exactly sure where the transmission ends and the diff' begins

Thank you for any info you have to share!

 

Yes you can use a little silicone. The line is the vent line for the motor.

 

That's actually pretty common when the vent hose gets deteriorated and comes off, happens on 2nd gens alot (they have almost the same design actuator). You probably want to check the ADD Actuator vent hose on the front axle too, it's not as common to come off as the one on the Transfer Case Actuator but it does happen.

The actuator housing itself should have an O-Ring sealing it.

 

Yeah, it's got the o-ring, but doesn't seem like it's doing much. I'll check the front one too...good call, thanks!