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The transfer clutch may be okay and the transfer valve and solenoid may be bad. A check of the transfer case pressure will tell you that. If you have pressure in the transfer case it should be the clutch plates that are bad. If you got no pressure in the test port (this is between the transfer valve and clutch plate piston) then it is the solenoid valve transfer valve assembly.
Huck has told me the wires are very brittle and easy to break when you get in there.
Let us know what you find out.
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