Yes(i think) it can still spin even if the transmission is in park, all it does it take the power from the transmission, and put it to the wheels, it can always move, the only thing that is not moving in park is the transmission.
Edit---If you have the trans out try to push the jeep with it in 4wd or 2wd, and see if it make the noise, if the transfer case is still in it.
99WJ Laredo I6-A 2wd
88XJ-Building on a budget.
95 E34 540i-DD