Oil for Ferret Fluid Coupling?

[LRDG]

To follow up with this thread, I drained the ATF from the fluid coupling and replaced it with ISO 10 hydraulic oil. The results were disappointing. It is still impossible to change into forward or reverse with neutral engaged. The only difference I noticed with the thinner oil was that the rpm drop when a gear is engaged from neutral (with the transfer case already in forward or reverse) is not so large.

What puzzles me is the old hands here who have been driving these Ferrets since we got them circa 1980 tell me they have always had to select forward/reverse with first gear engaged. It won't work in neutral.

Since my thinner oil experiment didn't work, I can only see two reasons the transfer case input shaft is rotating too fast in neutral to prevent forward/reverse from being selected - the fluid coupling is binding for some other reason than oil, or a band in the gearbox is a bit tight and partially engaging a high gear when in neutral.