Assuming a 2wd Durango, disconnect the rear drive shaft and push. I bet a bunch that when you had both wheels off the ground and rotated one for testing, the other side rotated in the opposite direction, as opposed to the drive shaft rotating.

 

Thanks again, JD. You are right. I jacked it up again this morning, spun a tire backwards and saw the other rotate in the opposite direction.

It's 4WD, but the transfer switch is in 2WD position. I tried to get the transfer case into neutral following steps in owner manual, but it won't switch to it. N light just keeps blinking. ugh.

 

UPDATE: Called AAA for a tow to the shop. Their assistance truck showed up before the tow truck did. The agent tested everything, tried to put in neutral for a push back and failed. He grabbed his jack on wheels, put it under the pumpkin, and pulled it out into the street. We put it in drive, were able to drive it away. He said it's the weirdest thing he's ever seen. He's never had a car lose neutral before.

Taking it in to a recommended shop to see what they say.

I love AAA. Member for life!

 

Another update: Shop has it raised, looked at the u-joints, driveshaft, transfer case, brakes, etc. Couldn't find anything wrong. They are dropping and opening the transmission, they think it's the reverse drum that is causing problems.