Disconnecting the battery will clear any codes stored in volatile memory, it will NOT clear codes stored in non-volatile memory.
You typically need to disconnect the battery for 30 minutes, I've seen it posted that folks that use the ignition key and try to start the vehicle while the battery is disconnected will drain the capacitors on the PCM and clear the volatile memory within a few minutes instead of having to wait 30 minutes.
Typically (meaning it might differ on the XK) the PCM (Engine Control Module) stores its fault codes in volatile memory and all the other major modules, and most if NOT all of the remaining minor modules, store their codes in non-volatile memory.
So disconnecting the battery "should" just clear fault codes for the engine.
Keep in mind, a good number of fault codes can be recognized by the PCM within seconds or a few minutes, and except for a very few remaining codes that takes days to test and reset the fault code, most of the rest will reset within a few hours. So if you have NOT corrected the problem that set the code in the first place, don't be surprised if it comes back within seconds of reconnecting the battery.
Also keep in mind, in most cases if the fault code was set by a fluke condition, and the controlling module does NOT see the problem again, it will also clear the code or at least turn off the warning light. So if you have a warning light, and it doesn't go out after a repair, in most cases that means the repair didn't fix the problem. There are only a few items that won't turn out the warning if the problem has been corrected properly. It will leave a fault code in memory, as reference for troubleshooting in the future, but if they controlling module sees the equipment operating properly for a while, it will turn out the warning light on the dash.
Yes, a scan tool can clear fault codes. Again, if you have NOT corrected the problem that set the code, expect the fault code to return within seconds to hours, a couple may take several days before its retested and sets the code.
Keep in mind, most inexpensive scan tools only do OBDII. That is the Gov Mandated Emissions self-tests and codes. That is just about all of the engine codes (since just about any engine problem will effect emissions) and a few major transmission codes. The rest of the fault codes, both reading and clearing, are proprietary and require a proprietary scan tool to read and clear them. These special proprietary scan tools are extraordinarily expensive, the cheapest and pretty crummy tool is at least $500 and for that price you only get one manufacturer's proprietary codes. The dealer tool, they charge $18k and you need to pay yearly fees to keep it.
So, if you have fault codes for transfer case, I'm pretty sure disconnecting the battery or using an inexpensive typical scan tool is NOT going to clear those. You'll have to take it to the Dealer or Big Independent Shop that can afford one of the expensive 3rd Party Tools to clear the codes.
If they forgot to clear the codes after completing a repair that is shoddy workmanship, but unfortunately, that's pretty common from a lot of Dealerships. You can't rule out they just forgot to clear the codes, BUT most likely they did clear the codes after completing the repair; they simply diagnosed it wrong and did the wrong repair, that is why the code came back again, because what ever is wrong they failed to fix it properly.
Either way, they failed to cleared the codes or they misdiagnosed the problem and did NOT fix it. I'd bring it back to them and complain. If they are going to charge more to try another repair, because they were wrong the first time, that is when I'd take it somewhere else, they clearly don't put in the time or just don't have the competence to get it right the first time.
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Last edited by Mongo; 02-25-2016 at 01:10 PM.