I have a 99 s10 4WD Blazer with automatic transmission. There is a noise coming from inside the tail shaft housing area and just in front of the tail shaft housing. It sounds just like the noise you would hear if the brake shoes were metal to metal against the brake drums. Not the heaver grinding sound you would hear when applying the brakes. More like a shushing sound. It happens whenever the vehicle is moving either forward or backwards.

 

If this is where the rear driveshaft connects, then it is not the tailshaft on the transmission, but rather on the transfer case (given that you have a 4wd vehicle). This could be caused by bad output bearings in the transfer case. How is the fluid level?