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That makes about 3 or 4 examples that have been posted of them being installed backwards now. Mine doesn't leak but I think I'll open her up anyways to see. Glad you got it fixed.

Actual page #199 in the -24P-1 TM. Item #15 in the diagram. From the -10 Operators Manual

The unloader is part of the compressor. I think Swede69 was commenting on your air issue. After seeing the state of those wires I question if pushing the button on the shifter actually worked the cylinder, making the test invalid. You can plug the airline going to the cylinder at the outlet...

Shift lock solenoid and shift lock cylinder. A couple wires from the T-case shifter go to the solenoid. The solenoid sends air to operate the cylinder.

Well alrighty then. Did the wires happen to get pinched at the pivot point for the shifter? The first couple times you pressed the button with no change befor the "incident" should rule out the shift lock cylinder as your air leak. The horn going off during a direct short to ground probably...

There are two air cylinders on the transfer case, the shifter lock cylinder and the front axle engagement cylinder The shifter lock cylinder locks the T-case shifter in place after the button is released and is on top of the T-case. It is air applied and spring released. Since it is air...

Work Packages 130-133 in the -23-1 TM might be helpful. If you haven't already, I'd be using shop air through the emergency gladhand while troubleshooting this so you can hear everything that's going on.