The transfer case is a 231 and the 4x4 only works on level ground the front axle moves left to right by hand.
any time the front axle move up or down the jeep stops completely stops till I roll back down the hill so I tryed it on flat gravel and gunned it both rear tires spin the front ones look like the want to move and it's kinda hard to get the to spin in wet grass also if that helps.
( this was tried in 4lo and 4hi everything works fine 2wd)

 

Do you have a vacuum front axle?

 

It's a 93 so I don't think it does.

 

What do you mean by the front end moved left to right by hand?

Are you sure that your TC is shifting into 4HI and 4LO? Sounds to me like it isn't. Just because the shifter moves to the marked spots on console doesn't mean the TC is actually shifting.

 

broken front axle?

 

Opps I think it's called a drive shaft it's moves and the light says it's engaged could it just be the drive shaft?

 

Are you saying that you can wiggle the front DS side to side, where it goes into the front diff?? If so, YES, you do have big problems with your front axle!!

 

Awhile back my front diff got worn enough that I could wiggle the front DS side to side at the front pinion. Shortly after that it grenaded and completely locked the front tires up so they wouldn't even roll in 2WD. I had to completely rebuild the front diff gears and bearings.

 

Well I can turn the shaft that goes out of the the t case to the front axle

 

if you can spin the shaft with the front wheels on the ground you have a major issue.

 

Like how bad it only turns a quater turn left or right.

 

in that case not bad i was assuming you meant spin like around. jack the front up and check both tires they should spin the driveshaft.

 

I don't think you are engaging the Transfer Case all the way, and when you put a load on it, it's popping into the Neutral position. Just a thought, could be a bent linkage.

 

mine would grind when it wasn't all the way in 4hi or lo

 

A video would clear up a lot