yes, transmission fluid will leak out. Transfer case is a sealed unit.
Mines an 01 (99 same way). Theres a gasket on the back of the trans(mating to thre adapter housing) then one from the adapter housing to the transfercase. If you do not seal it it will leak. Mine if I just use sealant it will leak. The way the transfer cases are they are not totally solid. I am not describing that right, but its not like a 1" inch flat area meeting another. Theres slots cut into the transfer cases. The thick ford gasket is better. If you need, I have the part number for my 01. It may not be the same but it can show them at the dealer what you are referring too.