I can only speak from my own experience, and a couple of guesses/memories.... I run an LT1 (300hp ish) in front of a TH700R4, and an NP231, no problems to date. At least none related to the transfer case. To address the above about the D version being better... NO, it is the same transfer case with some spline counts a bit different, not enough to say so. Where did my tranny/trans/adapter come from you might ask?? How about an S10 with a 4.3. Yeah, sounds wimpy doesn't it?? Seems to hold up pretty well so far. I THINK that the TH350 will bolt up to the S10's NP231, but not quite positive on that one, just can't quite remember my tranny info at the moment, and all my info is packed for my next move. The S10 NP231 is a drivers drop, and can be beefed as much as any NP231 can be. Call JB Conversions for the good stuff.
Rodney