There's a hose that goes from the hydraulic valve through the inside of the tractor to the 3 point hitch cylinder (also located inside the tractor on a D series). Your hose has probably sprung a leak, allowing hydraulic fluid to leak into the rear end area (my D15 does that a little but not enough to repair yet).
I've never done this repair, but I would guess you have to split the tractor to get to it. Lots of time and labor for a little hose. Had one fellow on this list say that now that he's done it once he feels he could do it again - with parts on hand - in one day.