Stuck in 4wd HI; goes 4HI/4LO ok, won't go to 2wd HI
 

1998 Blazer ZR2, Stuck in 4wd HI; goes 4HI/4LO ok, won't go to 2wd HI. I can switch from 4HI to 4LO to 4HI all day, but it won't go into 2HI.

I pulled the battery and tray out and found the diaphragm sucked in, pulling the cable. But the cable was rusted through the outer jacket and totally frozen. So I managed to remove the cable from the diaphragm and transfer case, put in a new cable, verified it was pulling/pushing the actuator in the transfer case. Then I hooked it back up to the diaphragm, put the vacuum line back on the diaphragm, but it still stuck in 4wd. The diaphragm was sucked in (collapsed) when I checked again, so I removed the vacuum line, allowing the diaphragm to expand and release the cable, thinking that's what was holding it in 4wd. NOPE.

Check the 4wd fuse - that was ok.

When I try and put it into 2HI, there are 3 clunking noises coming from the transfer case, like it tries 3x to go into 2HI but never does.

My uncle's truck had nearly the same problem and it turned out to be some missing teeth in the encoder motor that wouldn't allow for a shift back to 2HI. I posted pictures of the gears inside the encoder motor in another thread a while back. You should be able to find them.

Is the encoder motor connected to the cable that goes up to the diaphragm?