I know this has probably been beaten to death and I've searched and searched but none of the posts I've found get really specific or identical to my issue. I'm going to try to be as comprehensive as I can. I've been a mechanic for 15 years but have never done anything on the transmission/transfer case side but my kickboxing coach tore up her front differential and asked me for help. I replaced the front diff but when I went to back it out, as soon as I cut the wheel it locked up like someone put the brakes on. Like it's in 4lock. The button on the dash says it's in 4hi (normal) and if you press 4hi lock there's a small click. Same going back to regular. Going to 4 low lock has a loud clunk, as does going back to 4hi lock. (I'm including this because I don't know what it's supposed to sound like normally w/ this awd type system).
I've put it neutral and back in 4hi regular but no matter what I do when I go to drive it, it binds when turning tightly.

Also before the new diff came in I tried taking the ring gear out and locking it in for high so she could still drive it but whenever you stopped for a second it wouldn't drive anymore. Ie I pulled out of the shop and stopped at a light but then it wouldn't go. Just revved. I was under the impression that if it was locked it would drive even with a prop shaft out. So I don't know if it's locked or not??
Like I said I'm not really familiar with how the awd system is supposed to preform on these so any information will be appreciated.

 

Slight update: in the parking lot a couple of minutes ago I was driving and reversing in a tight half circle while stopping to switch 4wd settings. Eventually I put it in 4hi regular and went to back up, there was a loud pop and then everything was loose like its supposed to be. Tight turning is effortless now. What still concerns me is she says she's never put it in any of the 4 lock positions. She's never had a reason to since she got it. It shouldn't be able to select lock on its own so am I facing another issue here.
Also on the scan tool there are no codes and the gear selection data stream shows its engaging gears (supposedly)

I just don't want to give it back and it somehow lock up again.

 

Is it an 06 or 07? How did she blow the diff? Driving on pavement in 4 HI Lock will blow a diff.
Transfer-case encoder motor (controller on the Tcase) or Transfer case shift fork or BOTH. When the shift fork wears it will bind in 4Hi Lock OR just waffle between 4 HI & 4 HI Lock when they want to.
Like anything else, if you don't exercise it it will bind and not work properly. You/She has to shift from 4HI to 4 HI Lock to 4LOW Lock at least every 6 months to keep the transfer-case encoder motor and shift fork exercised.

Try this.
From it not being used very often the actuator for the Tcase can get "sticky". This has helped several people.
With the rig in neutral and foot on the brake, switch from 4HI to 4HI LOCKED to 4LOW LOCKED and back to 4HI LOCKED to 4HI about 4 or 5 times. End in 4HI (unlocked)
Listen for the "click" when it shifts the fork between positions.
Take it for a drive!
DO this at least once every 6 months.

 

This is how it was explained to me. It was acting like this turning into parking spots. When she took it to the shop in her city for an oil change they told her it felt like it was in 4wd. So she Googled how to put it into neutral and back again. She said it was fine for a short while after that but started doing it again but she kept driving it until the pinion and ring gears where destroyed.This sounds similar to what you explained. So just so I understand, it is possible for them slip in and out lock when they're worn?

 

I forgot to answer your first question, it is an 06

 

No, but it is possible for them to get stuck in 4Hi Lock when someone puts it there and then tries to return to 4Hi and does not know what they are doing.

When was the last time the T Case fluid was changed?

 

I couldn't tell you that, honestly. But I did check the transfer fluid and it's fairly brown but no metal or debris in it

 

This isn't making sense. Just took it for a drive. Was fine pulling out of the shop and going around the building. But by the time I got to a stop sign a quarter mile away it felt weird and when I went to turn right at that sign you could tell it was in 4wd again. Same story, I switched the buttons back and forth a couple of times and then went to drive. Something popped and it freed up. But it was back to acting up by the time I got back to the shop.

 

Look up H3 Transfer Case shift fork. It is almost always the range fork, but the lock fork can cause issues as well.

Just because you played with the T Case buttons does not mean you got it from lock to high. You still have to know that it can have pent up TQ that will not allow it to unlock until that is relieved. Have you tried backing up and turning back and forth in a safe area?

 

I'm not an expert but I'm pretty sure these aren't supposed to be able to move independently of each other.