Ever Heard of Anything Like This??

I drive a 91' S-10 Blazer and I love it! I won't lie to you, I abuse the hell out of it, yet it starts for me every morning and runs excellent for me all day. The problem I am having lately is every time I go to put it in four wheel drive it starts smoking immediately and heavily and it smell like rubber burnin'. My concern, of course, is that I can't play in the mud without my 4X4 status. Even more so, however, is that it will catch on fire! Here I am afraid to put it in 4x. Every heard of anything like this? Hope somebody has some input on this nasty problem!! Thanks for the help! Brian

Can't see the smoke from here. Notice any leaks under truck? Where's the smoke coming from? Tailpipe, near front differential, near trans, near rear, etc?