Mine did the same thing, and it continued to get worse until only 4lo would function. Replacing the transfer case solved the issue. I strongly suspect yours is on it's way also.
Using hand tools, it only took 6 hours being lazy, and i replaced the NP242 with a cheaper NP231 ($200 vs $40). Wasnt a bad time, just frustrating. If you DIY the transfer case, buy a flex head wratcheting 9/16" wrench. Even with that, some of the 6 nuts were two clicks at a time...
Lucky for me, an oil leak had kept the bolts coated with grease, and it wasnt a bad job to remove.
21, Recently returned from Iraq and Kuwait.
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