I have an 01 and it has been making a very faint grinding type noise for a few weeks now. Well today the "service 4wd" light came on. I then tried to switch from 2wd to 4wd just to see what would happen. Well nothing immediately happened. The light didn't change from 2wd to 4wd. I then drove about 2 miles and suddenly as I came to a stop it started making an incredibly loud grinding/knocking noise. I then turned into a parking lot and realized that the truck was now in 4wd, though the switch and light both showed 2wd. I turned the truck off and restarted it. The red "N" light was now on. I drove a short distance home and found that while accelerating it wasn't as bad. I got home and shut the truck off. I returned back to the truck after about five minutes to hear that it was trying to shift drives but was not able to. I disconnected the battery to stop that. Still stuck in 4wd with no lights showing besides service 4wd. Please help.

 

I will move this to the 2nd Generation Dakota Sub-Forum.