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I've got a very basic question - I have a 120V to 24V transformer https://www.functionaldevices.com/products/building-automation/details/TR40VA040/ and on the transformer surface it calls out "install in metal box only". So my understanding is that it's supposed to be screwed into the metal junction box, but the transformer itself is to be located outside of the box, possibly in the wall cavity, like pictured here:

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Is this a correct way of positioning the transformer? Or does "in metal box" mean literally "inside of the metal box"?

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That is exactly right.

The purpose of this arrangement is to put the mains voltage on one side of the "Great Wall Of Separation", and the low voltage on the other, as called out by the Code requirements for (not) mixing low voltage and mains.

However, as Tyson points out, the junction box must remain accessible and have a cover. I assume this is unimproved space, or you are putting a box extension on it to raise it to the finished wall surface. Burying the entire junction box and transformer behind drywall, that is no-go.

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  • P.S. a plastic box with KOs for ENT or PVC should work just as well as a metal box -- the problem with many garden variety plastic boxes is they simply don't have KOs, so you'd have to go through the hassle of putting a KO in yourself, which is possible with a KO holesaw and extreme care, but probably impractical if the box is already in place. Commented Sep 8, 2018 at 22:54
  • Almost exactly right, it’s missing wire nuts on hot an neutral and it’s missing a blank cover. It’s also assumed this will remain accessible from this side and not actually be sealed inside a wall cavity with another surface such as Sheetrock.
    – Tyson
    Commented Sep 8, 2018 at 22:57
  • @Tyson -- as long as the box itself is not covered by a building surface, it's OK to seal the device inside the wall cavity Commented Sep 8, 2018 at 23:26
  • A 24 V transformer in my house (for the doorbell) is installed on a metal blank cover on a recessed box so the transformer is projecting into the room (a closet containing the a/c air handler evaporator and NG furnace. The walls of the closet are drywall. Commented Sep 8, 2018 at 23:28
  • @ThreePhaseEel if as the OP states the unit is labeled “metal box only” does it maintain its listings if used with a plastic box?
    – Tyson
    Commented Sep 8, 2018 at 23:35

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