I have a clunking in my 4wd and I had a question, I recently had the transfer case off and ran it in 2wd and it would only drive in hi or low why is that?

 

Without knowing more details, it sounds like when reinstalling your transfer case, the linkage may have become mis-adjusted. You may have to adjust the linkage so the actual transfer case ranges, match the selector lever positions.

As for a clunking, is that sound only when you're driving? Does the clunking noise vary with speed? Why did you take the transfer case out and what did you do to it?

If the transfer case is not quite in a range, I suppose it could make some strange noises including clunking.

 

I found out the culprit it was just a bolt that was installed the wrong way and was rubbing the front drive shaft.