So how screwed is my Jeep?

[Hound]

4x4 on the road is a big problem with these older 4x4 systems (and even in some newer ones). It should only be used off-road or in snow, etc. Basically anywhere it allows the tires to slip and not bind the front diff with the rear. I rebuilt a 77 CJ5 from the frame up, they are pretty simple all around and part of why Jeeps get thier reputation for being good off-road. You can replace the seal pretty easily depending on which Dana axle you are running (30 vs 44). Drain the diff, pull the cover and see what is on the bottom or anything missing on the teeth. If there is damage there it should be obvious. This will let you know if you are "screwed". Also check the universal joints, they are even easier to fix. To check the u-joint just look for slop between the drive shaft and the diff. If you want to ask more questions feel free to PM me and I will give you my phone.

Rough guess, the front over heated for some reason and started pushing diff oil out the back. It may be a problem...... It may not. There is not enough information here.