Do you have fluid in the transfer case?
Is your actuator working or is it broken and just sounds like it's working?
Is your front diff blown? (Not likely, or you'd hear all sorts of noise.)
You may have internal transfer case issues, but my suspicion is you have a bad actuator. Go to nicoclub.com and download the service manuals for your T and find how to diagnose the actuator for the tcase - provided you have fluid in the case, which is still the first thing I'd check.