[j cAT]

I find the vehicle 4wd confusing to me with your post.

your vehicle should have auto 4wd . this is activated when the vehicle PCM see a slippage.

with 4wd lo/hi you are in locked 4wd. the front axle and rear are locked as one.

when stopped and stuck you use 4wd hi/lo not auto.

when operating on slippery wet/snow roads you use auto 4wd.

with the front diff damage you may need replacement. with the encoder motor failure if that was from tranfer case fluid not replaced that could also be another repair.

the drive train fluids require replacing every 40,000miles if not used all that much . if your using it all the time hauling on dirt roads/plowing then this should be replaced every year. front/rear diff, transmission,rear diff....

operating on dry solid pavement will chew up the gears.