The seals in the control valve assembly have failed. This is the one you need:
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Mine did the same thing after years in the desert. I recall taking it apart and not really being able to fix it - don't recall off the top of my head why but I think it was due to the seals not being generic o-rings and the condition of the plastic knobs was also pretty terrible from the sun so I just changed the whole unit. I got one a year ago off ebay for $75 shipped so you might do some additional digging. I bought a Bendix replacement from NAPA but wasn't quite the same and didn't have threaded bosses for mounting so I went looking for the original Haldex part.