2000 blazer transfer case problem

As the title States I have a 2000 blazer 4x4. I had what I thought was a bad u joint but upon investigation I found I have a problem with my transfer case. So the problem is that the front driveshaft is "locked in" all the time. It will not spin freely at all. Even with the transfer case and transmission in neutral I can't get it to move by hand. I removed the front driveshaft from the front diff and the yoke on the front diff spins freely. So something is up with the t case. When in 2 wheel drive the light indicates 2 wheel drive and same with 4hi and 4 low. You can even hear the transfer case engage/disengage when switching. Although when in auto 4x4 the light doesn't come on, but I know it's working I tested it and it's 2 wheel drive until the tires start to slip/spin then you can feel the 4 wheel drive kick in.

My question is, first is the driveshaft even supposed to spin free? (Im used to older vehicles where they do unless in 4x4) Next if i do have a true problem could this problem be electrical/vacuum problem, or is something inside the t case probably effed? I did drain a little oil out of the t case and check the level oil looked OK and not metal or anything in it. I miss the good old days when there was just a shifted on the floor and no electrical or vacuum bs to worry about ha-ha. Any help in the right direction is appreciated, thanks.

The 4wd buttons on those Blazers are linked to a system of vacuum operated switches/valves that often go wrong. It could be as simple as a bad or disconnected vacuum line, a loose electrical connection, or it could be one or more of the valves, switches or solenoids that operate the transfer case. I'm not really sure how to fix that sort of thing, but I doubt there's anything mechanically wrong with the transfer case itself.

From what research I've done I have some new found knowledge. Correct me if I'm wrong but I believe the front driveshaft should always be turning (or "locked in") from what I've read it's coupled to the rear driveshaft via a chain inside the t case, correct? If so that would mean my problem isn't a problem at all...but that still means I need to figure out where my " clicking/clunking " sound is coming from. It sounds identical to a bad u joint and has the same symptoms(vibration around 30-50 mph) but the front u joint on the front shaft is good... At the rear of the front driveshaft where it goes into the transfer case there is a boot, is there a CV joint underneath that boot? If so that could be my culprit. But I am not to sure how to check it.