Drill the pilot hole in the end of the shaft.
This is done with a 1/8" drill bit. This step is easiest done with the vehicle raised 6" on jack stands and the transfer case lowered 2". With the vehicle being as high as possible, you'll be able to sit under it and gauge the direction of the drill. The pilot hole needs to be drilled into the shaft as straight as possible. Take your time.
The pilot hole needs to be 1"-1.25" deep.
After that is done, you need to bore out the 1/8" pilot hole with a 5/16" drill bit.
Just to be safe, I used a 3/16" bit before I went to the 5/16" bit. This makes it a little easier to drill a straight hole.
Make sure the final depth of the pilot hole is 1.25".
