I recommend you engage 4x4 low and leave the vehicle running then raise the complete front end and see if the front hubs are engaging the halfshafts by turning the tire.
The transfer case is equipped with an electromagnetic clutch which is located inside the case. This clutch is used to synchronize the front driveline. When the mode select switch (MSS) on the instrument panel is turned, the 4x4 module (PCM) activates the electromagnetic clutch and powers the transfer case shift motor. When the shift motor reaches the desired position, as determined by the contact plate position inputs to the 4x4 module (PCM), power to the shift motor will be removed. When the transfer case front and rear output shafts are synchronized, the spring loaded lockup collar mechanically engages the mainshaft hub to the drive sprocket. Finally, the front axle integrated wheel ends (IWEs) are engaged and the electromagnetic clutch is deactivated
Integrated Wheel End (IWE) System
The integrated wheel end (IWE) system contains the following:
The IWE system uses vacuum hubs that engage the front wheel hubs to the front halfshafts or disengage the front wheel hubs from the front halfshafts.
The IWE solenoid receives engine vacuum from the vacuum reservoir.
When the 4-wheel drive system is in 2WD mode, the 4x4 module (PCM) supplies a ground path to the IWE solenoid to apply vacuum to the integrated wheel ends (disengaging the front hubs from the front halfshafts). In 4WD mode, the 4x4 module (PCM) does not supply the ground path to the IWE solenoid, vacuum is not applied to the integrated wheel ends and an internal spring keeps the front hubs engaged to the front halfshafts.
You need to check for vacuum supply at the front hubs when 4x4 is engaged
PLEASE REPLY IF NEEDED
This is definetly the first place to start looking for vacuum leaks or incorrect operation of the hub.
Follow the vacuum lines from the wkeel to the source.
NOTE: The engine must be idling during the following steps to supply vacuum to the IWE solenoid. Start the engine. Disconnect the output vacuum line at the IWE solenoid. Switch the MSS to 4H. Measure the vacuum at the output port of the IWE solenoid. Is the vacuum less than 25 mm (1 in) Hg
Reply with these results test K7 You will need a vacuum pump and gauge to perform these tests
NOTE: The engine must be idling during the following steps to supply vacuum to the IWE solenoid. Start the engine. Disconnect the output vacuum line at the IWE solenoid. Switch the MSS to 2H. Measure the vacuum at the output port of the IWE solenoid. Is the vacuum greater than 254 mm (10 in) Hg?
Measure the vacuum at the input port of the IWE solenoid. Is the vacuum greater than 254 mm (10 in) Hg