The XJ has a 4.5 inch rustys lift installed on it and when they were servicing my transfer case he mentioned that it looked like it was binding. Without talking to the prior owner I am going to assume everything minus the pitman arm is stock. Would this cause the steering to be "loose"? What I mean by loose is that at a dead stop I can turn the wheel some without the wheels moving. The first time I drove it, it was much worse he said he tightened something and it has improved. What components should I change out to make it beefier?

Okay are we talking about transfer cases or steering. I'll assume we're talking about steering. If you can move the steering wheel and the tires don't turn or there is a lot of play Then I believe the problem to be your steering gear. And by your Sig I'd say this is a safe assumption. However before replacing the gear look at the frame around the steering gear checking for and cracks on the frame. I do believe you need either a rebuilt or new steering gear. Don't go to your local bone yard for this one. You will want a new or rebuilt gear. Good luck.

Also check your sway bars and track bars to make sure they are tight. Sounds like a steering box or shaft.

Check top make sure all the tie rod ends are tight. also make sure your track bar joints are tight. i had the same problems with my Rusty's 4.5" kit still have most of it in one form or another still. Make sure your control arm bushings are good. any thing that is loose on your steering can cause that dead spot. Also if your drag link is bent can cause that dead spot.