Hi R.T.,
I'm kinda' new here myself.
Yes, you definitely need the MMK-501 kit, as this is the parts that convert the NP203 transfer case itself to function part-time. The other parts (MMK-95-32720 and MMK-402)are needed to convert your hubs to selectable lock-in or lock-out. I had a NP203 conversion in my K20 (79 chassis/84 body bare frame restoration), but it wore out and i then went the more costly route, bit the bullet, and installed a NP205 bulletproof gear driven unit, but these are more costly and requires a new lengthened driveshaft.
You will appreciate the part time conversion, with today's gas prices and also less unnecessary wear and tear on the front drivetrain.
jbeam1