I'm working on a 1994 dodge Dakota and having problems with the 4x4. Transfer case engages front drive shaft turns tested actuator and its working fine. But when I lock collar by hand it stops both shafts. I believe that its got to be in the differential or am I overlooking something?

 

Opened the cover and everything was destroyed

 

Ouch.... might be cheaper to replace the entire front axle with one from a junkyard. Just make sure it's the right gear ratio.