So you pulled the big allen screw to check the fluid in the tcase? If your drive shaft is spinning in park (not cv shaft) in 4wd your transfer case is jacked I think. The original problem was with the buttons so sounds like it got stuck engaged at some point and probably stretched the chain in the t case and it is now slipping. Maybe.... Still think your confused about the tcase and diff though.

 

Diff is little guy in frt that actuator cable goes in. Tc is big guy in back with encoder motor on it and both front and rear drive shafts. I can turn the wheel in four wheel drive and park and cv axle into diff turns and then front drive shaft turns.

I think you are right...transfer case is slipping. Pretty sure it is the clutch packs either being worn or wrong/burnt fluid.

The original problem was the 4wd switch in dash.

99 jimmy with 300000km on it.

 

I think you would be getting some nasty sounds out of it if it was slipping though. Might try jacking up the whole truck and see if you have positive engagement without resistance. Since it has auto 4wd it could still be something goofy with that and the buttons are showing something other than whats actually going on at the tcase. This would explain the shaft turning as the actuator is still engaging the diff and the transfer case is not engaged. But if your getting noticeable gear reduction then im not sure like I said I have 0 experience with the 4 button.

 

There is a significant change when I engage the four wheel drive as between each of 2wd, 4hi, and 4lo. I am convinced that the system is now working as far as the electronics and cables are concerned. However, the autotrack system (auto 4) has clutch disks in the transfer case, like a motorcycle clutch disks. They would not make noise when they slip, and the vehicle has high km so it is not unlikely that they are worn. It could be the fluid as I read it should be blue and it is not. It is dark. It is not gear oil, but it might be that I need to replace the fluid to make it work better.

I am sure that if I jacked it up on all wheels with no resistance the 4wd would show as working, but the front wheels would not engage on loose gravel so it is not working in any meaningful way. It is not worth it for me to pull the transfer case and replace the clutch disks.

 

On my 2001 Blazer LT which is 4 wheel drive underneath my battery plate ( plate that holds the battery up and secure.lol) there is like a roundish actuator ball with a cable that links into it. Sometimes they get stuck from Rust or corrosion. If your vehicle in question has this, hit it which some liquid wrench or WD40 and let it soak for a few hours. Then try engaging the 4 wheel drive by pushing the buttons on the dash. I had this happen to me last springtime, and a mechanic I know told me about it and I tried it and worked. Saved me easily a few hundred bucks....GL .!

 

I would definitely recommend a transfer case fluid change. If the fluid is especially dark, burnt smelling, and/or has any tint of red to it, I would change the fluid, drive it for a 500-1000 miles (a few tanks of fuel) then change it again. Having the wrong fluid can cause all kinds of problems with the clutch engagement.