02 GMC Sierra transfer case

Hi All, I just bought this truck and i noticed a lot of clunking from underneath when start out from a dead stop. I also heard a clunking when spinning the tires on the ice. I got under there at the local oil change shop and the drive shaft rotates freely and inch or so and when running makes some clicking sounds when going from reverse to drive in the transfer case. Any ideas. Thanks to all those mechanics and service guys that allow their customers to quickly trouble shoot an issue without charging them. Very much appreciated!