this problem is more then likely in the transfer case itself...it isn't the front axle actuator doing this...this may be cause by a worn shift fork inside the case,,sorry
Is it possible to get a shift fork or will I have to find an entire transfer case setup? Is it worth rebuilding the transfer case vs finding a decent used one from a salvage yard? What kind of shops would perform a rebuild? There is a place about 50 miles from where I live that I have heard some co-workers mention they rebuild all kinds of drive shafts including special applications if you have the measurements from your project. Should a drive shaft shop be able to rebuild the transfer case?
a transmission shop would be more likely able to rebuild this...it may be cheaper to buy a used one from a salvage yard...transfer case parts are high$$$$