Patrol transfer case

Hi,

I pulled the rubber bung out of the centre case today and oil and water ran out (GU patrol 4.2 diesel). This is the bung just forward of the centre case which is forward of the transfer case.

I know how the water got in, Birdsville track. But not sure how oil would have made it in as well. The transfer case oil level is a little high from when I filled but oil still looks clear, so doesn't appear to have water in it. Maybe oil leaking past the seal.

Any ideas?