I believe my 1994 xj front axle is still engaged even when I'm not in 4wd. The transfer case goes into 4H and back to 2wd just fine, but if I feel the diff cover after driving at highway speed for a while it's hot and I notice my RPMs are higher at highway speed than they normally are. I've been dealing with it for a few weeks now but I'm noticing a significant loss in MPGs and I'm wondering if the axle will be damaged by continuing to drive it like this. I'm thinking it might be the vacuum shift motor but not sure, any help is appreciated...

 

I believe your 94 will not have the vacuum disconnect system. If you're in 4wd, you would certainly notice it and feel popping and other weirdness upfront. Post vacuum-disconnect systems on Cherokees (92 I believe was the last year?), your hubs are "locked" all the time...your axle and gears and front driveshaft will spin when moving, but it will be disconnected at the transfer case and no power will be applied.

The easiest/cheapest way to prevent that for on-road driving would be to remove your front driveshaft. Lockout conversions are pricey for the XJ.

 

Most people lock it up front permanently, later models don't have the vacuum, the front diff spinning won't cause an issue, nor should it cause a significant loss in mileage.