I have a 2004 Ram 1500, 5.7. I'm having trouble with the 2WD. Its a manual shift on the floor. 4HI works great, 4LOW works great, will go in N ok...but when I go into 2WD I hear a grinding noise coming from the front of the vehicle.

Checked the front differential fluid, completely full. Sounds to me as if the axle isn't completely disengaging. Any ideas? Also would it hurt, since I believe that the transfer case is shifting, if I put it in 2WD and then took the front drive shaft off?

 

I think first suspect is the transmission shift cable. Looseness in the cable, lever, and/or bushing could result in bad shifts.
You can take a look at the general condition of the linkage. You can see it just above the transmission fluid pan on the passenger side. Have someone work the shifter while you look at the bushing and cable movement.
Lots of videos for diagnosing and adjusting. This is fairly common problem but easy enough to fix usually.