If the linkage is out of adjustment or worn, the t-case cold be in neutral. That would act like you discribe. The grommet you mention may be plastic. Should be able to fix that easily then try the t-case.
2000 XJ Limited, 4.5 Rusty's All spring lift; 265/75/16 BFG KM2's; 4.0, aw4, 242.
2001 XJ Sport, 4.5 Rusty's lift, 32x1150x15 Hankook Dynapro MT's. 4.0, aw4, 231, 8.25 rear with power trax locker.
08 f 150 2.5 lift, 33's, arb.