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The most common cause with what you have described here is a fault with the transfer case actuator itself.This fails internally and causes this issue.There were some faults with the position sensor in the transfer case actuator where the actuator was removed and taken apart for inspection and the sensor replaced.GM had released a bulletin on replacing this sensor depending on what code was set.
What needs to be done from here is to have the codes read out with a compatible scan tool that will read the transfer case computer.Once this is done any codes set need diagnosed to help locate and repair this issue here.I suspect either the transfer case actuator sensor needing replaced,actuator itself or an internal mechanical fault in the transfer case needing removed and repaired or the transfer case replaced.
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If it was a fuse then the front diff wouldnt engage as well as they are all tied in together for operation here.This sounds more like the transfer case actuator itself needing replaced.This is very common.
I would have the transfer case codes checked to be sure.
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If you can hear the motor on the transfer case engage and disengage then more then likely this is an issue in the transfer case itself mechanically.I have seen shift fork issues as well as damaged gears internally cause this here.I would still have the fault codes checked/read out to see what codes are set and then those codes diagnosed as this will help to make sure this is the cause here.It is still possible that even though the actuator on the transfer case is shifting that it is not shifting properly and may be the only issue needing replaced.