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I reciently had my transfer apart and the only thing I can think of that might make the front engage in hi but not low is - maybe a circlip sliped out of it's grove so the dogs are not engaging. At any rate it's going to have to come apart, so bite the bullit and go for it. The only reason I took mine apart was to replace the seals, and the chain as a precaution. The manual trans juice was leaking into the transfer, so the trans was kinda dry and the transfer overfull.
On problem #2: There is a switch on the transfer that closes in 4wd positions, make sure it's closing. Also there's a spring loaded plunger switch on the front axle (smaller one, on top) that must be working. Try hot wireing the wires going to these switches and see if the front axle engages to the driveshaft. If the front part of the diagram by the transfer lever is not lighting up in 4wd, you have an electrical problem with the front axle.
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