well my transfer case just crapped the bed a couple weeks ago, and i can tell you i was having the same exact problems.....it was the snap ring inside the transfer case.

Dont worry though, replacing it is easy....i took mine out the other day in a little over an hour. didnt need any jacks or anything, just used ratchet straps to the frame, and slid it right out. pretty simple job.

check http://car-part.com to find a new T-Case if this indeed is your problem.....which i think it is. And if you do have to replace the T-Case, dont forget to get the T-Case saver.