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Originally Posted by svxfiles
If it is binding with the FWD fuse in, then I believe your f/r clutch pack is stuck, or worn to the point of needing replaced.
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More likely the solenoid has failed. If the FWD fuse does not immediately an completely cure the binding problem, then the solenoid is not working. A mechanical failure of the clutch itself is very unlikely. A mechanical failure of the solenoid is possible, but less probable than an electrical failure of the solenoid. I had to open my transfer case a couple weeks ago to repair my solenoid. The wire had fatigued at the electrical connector and had simply broken off. I soldered it back on, secured the wire this time, and went on my way.
Usually, when you put the FWD fuse in the FWD light will appear on the gauge cluster. If it doesn't appear, you have an electrical problem. The easy way to check the solenoid is to hook a volt meter up to the FWD fuse contacts. If you get voltage when the engine is running, the solenoid should be good or shorted. If it blows the FWD fuse, it's shorted. If you get no voltage, the solenoid has lost continuity.