There is a lip seal in the transmission extension housing, the tail-shaft. There is also another lip seal in the front of the transmission for the torque converter.
Both the drive shaft and torque converter shaft are finished mirror smooth when new. To get this out of the way, the drive shaft (extension housing) seal surface CAN move back and forth if the drive shaft connects DIRECTLY to the differential. Otherwise the seal rubs on exactly the same spot on both the driveshaft "slip yoke" and torque converter shaft. The "slip yoke" is the slip sleeve mentioned above.
It MUST be absolutely mirror smooth, not the faintest trace of a surface wear ring made by the seal.
Why? Depending on how rough and deep the ring is worn into the mirror finish of the shaft - a new seal will start leaking - anywhere from a week to a year after replacing the new seal and I'm referring to "The Best In The Business" grade seals.
With the drive shaft a new yoke is actually cheaper than a "seal saver" micro thin laminate would be. Seal savers are used on engine harmonic balancer shafts when they get grooved. With a torque converter, I prefer to exchange the thing for a re-man.
Anyway, if the driveshaft slip yoke is grooved, a new seal will not last long. It is impossible to forecast the lifespan of a replacement seal. But suffice it to say a mirror new-like surface will allow a replacement seal to last 10x as long before leaking.
Most units use one or more driveshaft "center support rubber bushing mounts" to support lengths of driveshaft between transmission and differential yoke (AGHH! yet another place where seal wear causes a groove and leakage!)
I despise oil leakage!
Here is a tidbit link for seal saver info...
http://www.ebay.com/bhp/transmission-lip-seal-tool
SAMPLE IMAGE OF SHAFT SEAL DAMAGE
http://www.aesseal.com/sites/default/files/article/lip-seal-damage.jpg
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