Sounds as if it is working how it should. Why are you trying to get it to kick gravel in 4H anyway? If you really wanna see or hear if your 4x4 is working maybe try a un paved dirt road with a decent grade somewhere on it and come to a dead stop. Proceed in 2wd and notice tire spin and then lock it in 4x4 and I bet you can tell the front end is engaged and pulling.
If you have never serviced the transfer case it is highly advisable to do so as soon as possible. The fluid that came out of mine the first time was sinister.
There is a control module in the passenger side of the tk that has a alarm on it that buzzes quite annoyingly if the 4x4 fails to engage, along with flashing 4x4 light and incorrect indicator by the odometer.
Also check both your front axle flanges and confirm that they are both fully in the differential and that neither has popped out. There are a lot of threads and problems related to these popping out of the front differential but I do not think you have this problem.
