You seem to be left hanging on this one. Have a few of these, so:
The 4 button autotrac xfer case uses autotrak II syn fluid thats blue (dealer item about $7 a qt and it takes 2 qts). This case has known problems and GM says to get it hot, change the 2 qts with new, drive 100 miles, flush again and add 2 more qts. There are clutch packs in it that have friction problems especially if you drive alot in "Auto" 4Hi. I'd change it once and see if that helps before the 2nd change. That front shaft CV joint on the xfer case end has some play but the u-joint should not. Blazers have unequal length CV axles and this also creates some vibration. Make sure the front diff is full too with 80w-90.
Finally - if you look at the NP 243 and 246 xfer cases thay ARE both always active chain driven so the drive shaft always turns (does not pertain to the older manual xfers with manual hubs). The drivers side CV axle always is locked into the front diff and the passenger side has a coupler that is vac actuated.