I had ever seen what is going on in a GM Auto 4wd transfer case and I found this video pretty instructive.

This was for a Suburban. Are they the same for our Blazers?

 

Very good video. My wife's tahoe has the same transfer case and had the exact same failure. I found a used replacement and installed the case saver. I haven't tore into the original tc yet but I plan to this summer. To answer your question though I believe the np246 and the np236 are very similar. I haven't heard of many 236 tc failures though.

 

It was interesting to see how the clutch pack worked.

 

NP246 failures are very common. I had a '99 Suburban that had one and it was a POS. But then that whole truck was a POS, so...