I have an 88 k5, auto tranny, manual hubs... The transfer casse kicks into N when I'm braking or coasting while in D. if I shift the tranny to P, there is a grinding sound. It won't go back in gear either. The transfer case selector is still in 2H. I have to turn off the truck, shift to P, and then move the transfer case stick from 2H down to 4L and back. Does anyone know the problem or solution?

 

If your transfer case is shifting into neutral, then shutting off the truck is really the only way to ensure that the transmission comes to a complete stop. The grinding is completely normal after the transfer case shifts into neutral as the transmission is still moving and could be moving quite fast when you put it into park. You should not do this as you could end up breaking off the park pawl inside the transmission.

The problem is that your transfer case is shifting under braking. This is likely caused by either an out of adjustment linkage or a problem with a motor or trans mount that is allowing things to shift around when braking.