On my 97 ZR2, manual trans, the 4wd indicator remains on when I push the xfer case shifter forward (into 2wd). I tested on snow, and it does go in and out of 4wd. I'm wondering if the hubs are staying locked. One u/c mechanic told me there are no hubs, that the front axles turn all the time and when in 2wd only the front driveshaft stops turning. Low miles (60k 3rd vehicle). Had the vacuum switch on the xfer case fail years ago with opposite problem, i.e. indicator showed 4wd but only really in 2wd. Thanks.

 

You do not have locking hubs in the older, solid front axle sense. There is an engagement system internal to the front axle. The transfer case directs engine manifold vacuum to the front axle engagement actuator under the battery whenever you are in 4HI or 4LO. The actuator then pulls on the cable and engages the front axle.

Does the front driveshaft spin free when in 2HI with all 4 wheels on the ground? If so, the problem is likely a failed switch on the front axle near where the cable enters on the passenger side of the differential center section.

If not, then there is something wrong with the engagement system that is keeping the front axle engaged all of the time.