I found a rotted hose under the passenger footwell...on the rear end, it connects to a large metal component just back from the transmission...probably the transfer case???...going forward, I could not trace it. It goes up behing the engine, under the coil pack and disappears???

What is it? What does it do? Where does it go? What should I do?

All 4 wheel drive functions seem to work, but we have some suspicious transmission issues...

 

You need some wider shots, close up's all kind of look the same in engine compartments.

 

looks like a vent hose to me. so basically just run a new rubber line up to the engine compartment and tie it off

 

yup looks like the tcase vent and over flow tube

its suppose to run up to the engine compartment and be by the firewall