Thanks. That will give me a project for this evening. I believe we have narrowed down my issue to an electrical problem with the coil.

 

The front right was about 25 ohms and it is engaging in AWD. However, to make it disengage I have to shift to reverse. Could this be a symptom of a worm armature plate?

The left side is not reading any ohms on my meter. I stripped the insulation off and cut the wires close the to hub to rule out a broken wire and still no ohm reading. It appears the coil is bad on the left side. Looks like one more parts order for me.

 

First one is common if the plate is magnetized or the fluid is old and sticky. You have to back up to make the hub disengage. On the other I think you're correct on the coil. The service manual has a good step by step procedure on replacing the coil and always replace the coil seal sleeve. Best to also replace the hub and strut seals and be done with it.