The most common failure on this type of 4wd system is a failed front axle actuator. This will prevent 4wd enguagement and cause the lights at the floor shift not to illuminate. I am not aware of any adjustment nut or bolt on the bottom of the transfercase. The only one I know of is the drain plug that a 3/8 socket extension will fit into. Here is a description and operation of your transfercase and possiable causes.
PURPOSE The transfer case is used to provide a means of power flow to the front axle. The transfer case also provides a means of disconnecting the front axle, providing better fuel economy and quieter operation when the vehicle is driven on roads where four wheel drive is not required. In addition, the transfer case provides an additional gear reduction when placed in low range. This is useful when difficult off road conditions are encountered.OPERATION When the Ignition Switch is in RUN and the four-wheel drive control lever is engaged, the transfer case switch closes and battery voltage is supplied across the front axle actuator. The front axle actuator energizes and the four-wheel drive gears are meshed. This meshing action of the four-wheel drive gears closes the front axle switch, and battery voltage is supplied through the WHT (156) wire across the four-wheel drive indicator lighting the bulb. Battery voltage is also supplied through the front axle switch contacts and PPL (420) wires to the rear-wheel-antilock brake module. This will keep the antilock braking system disabled in 4WD mode. The In-Line Diode (auto trans only) prevents the transmission converter clutch solenoid from engaging when the front axle switch is closed.A transfer case relay is used on one-ton vehicles equipped with dual wheels and four-wheel drive. This relay is energized when the vehicle is in 4WD mode. From the transfer case relay, voltage is supplied to the transfer case synchronizer.
Yes its near the center of the front differential on passenger side.