Wow, my 93 GC is doing the same thing. I questioned my mechanic and was told not to worry about it when he test drove it.

Guess I need to find a new mechanic. Worried about the cost of repair, but looking for a rebuilt transfer case now. Have you had an estimate done on this repair? Just curious as now I'm facing the same. <tries to

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Thanks for posting this problem, I knew I wasn't losing my mind that there was an issue with this.