i can tell u is that on the speedometer it shows that the 4wd is on and even if i go to flip the switch to 2wd
it still shows that 4wd is on which it sadly is i can see the prop shaft runing from the rear transmition to the front
moving

 

actually sounds like the roll cage in the front diff is broken, have to tear apart the front diff and check

 

it might be that idk id like to here more things befor i go trying to fix it

 

find the wires coming out of the diff and follow them up under the cover beneath the headlight pod and disconnect the plug right there, if it stays in awd after u disconnect all the power to it, then the roll cage is ur problem, its a common problem with that year machine

 

Ditto on kcaves post!

 

The prop shaft that goes from the transmission to the front gear case will always turn.It will turn no matter if you are in two wheel drive or awd.If your awd icon in the speedo is on even when your in two wheel drive then its most likely the awd switch or the speedo its self is the problem then.Like Kcaves said unplug wire if problem goes away then its electrical then.