I have a 2003 2500hd 4x4, the problem is when I push the 4hi or 4lo switches the indicator lights work you can here the transfer case making noise. When you go from 4 to 2 wheel drive you can hear the t-case and what sounds like the axle actuator. The thing is when you have it in 4wd the front tires dont pull. I dont have a code reader.

 

Does the indicator say 4hi to verify that the transfer case has completed the shift. If it is in 4hi on the indicator and the front driveshaft is spinning then chances are that the halfshaft on the right hand side sheared inside the front diff. Not the CV shaft but the flat faced shaft the CV axle bolts to on the passenger side.

 

the front driveshaft will turn when indicator light is on 2wd, when the indicator light is on 4hi or 4lo the front drive shaft will not turn freely(maybe 1/8 turn).Also today when i was driving at 35 mph i tried to switch to 4hi and there was a gringing noise - sounded like it was the front differential actuator. When i am stopped it will switch without grinding noise.

 

Todat I removed the actuator and watched the plunger come out, reinstalled actuator and lifted front end off the ground. Turned front wheels and the driveshaft was also turning. So I am thinking that the transfer case is not locking in which I think would be the encoder motor, does this sound right to anyone.Or is there something else I should try?

 

do you have the auto trac tcase?if yes then the clutch's inside the t case are burnt up.a friend of mine had the same prob and it had to be rebuild,dealer did it.
also if you can get the truck up on a lift or on jack stands try it that way in 4x4 to.my buddy's would spin all 4 on the lift but on the ground ony 2 would spin.

 

I dont have the auto trac TC. When I had the front lifted up it was in four wheel drive, so to my knowledge I shouldn't be able to turn the front wheels since the rear was still on the ground. I read that you can take off the encoder motor and shift the TC manually to see if it is the motor or the TC. Has anybody done this before??