That is a pretty bad leak, I just have the level kit and mine is leaking a little. It is just wet around the input. As long as the level isn't low it won't hurt anything. But if the level is low I don't think it will matter if you are in 4wd or not. I am pretty sure everything up there spins even in 2wd. I am going to drive mine and just check the fluid every now and then until I am closer to the end of my warranty.