What engages the transfer case?

Could it be the encoder motor is not working properly?

One more - less likely possibility - is the plastic shift fork inserts inside the transfer case are worn to the point they are allowing the shift hub to move enough to jump out of 4x4 range .. This is why it needs to be on a lift with an operator and an inspector. Testing will eliminate a lot of headaches plus wasting time and money by guessing at it.

Thanks for the advice! It seems like everything in the front end is working properly because when the tcase does finally engage the front wheels spin. It seems my problem is something with the tcase not engaging the front driveshaft properly? Could it be a bad encoder motor? And if so shouldn’t some kind of “service 4wd” light come on in dash?

Once the encoder motor shifts the transfer case into 4x4 it’s out of the picture .. The 4wd indicator lights in the dash *selector switch* would be blinking if the encoder didn’t complete the shift .. This is why the testing I posted previously needs to be performed... I wish I had the vehicle for hands-on testing but unfortunately that’s not possible .. IF the front driveshaft does indeed suddenly stop rotating while 4x4 is selected - strongly suspect range shift fork inserts are worn or broken... The transfer case itself is a very reliable assembly! .. The only weak link I have found is those damn plastic shift fork inserts. Good luck with it!