Yeah, I had the same thing. There is a TSB on it. The repair is simple, go under the truck with a prybar and stick it up against the spring on the transfer case lever and pry so it takes the slop out of it. It will come back again every so often and need a re-adjustment. I redo mine with every fuel filter change.
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Chris
1997 5sp 4X4, HX40, BD 4" Brake, Marine Compression, Custom Tuned Injection Pump, 370B Injection Nozzles, Delivery Valves, Governor & AFC Spring Kit, Psychotty Air, Water Injection, 6" Chrome Exhaust System, No Smoke Valet Switch, McLeod Dual Disc Clutch, Mag-Hytec Rear Cover, Cummins Chrome Kit, Optima Red Tops, Hadley Bully Horns, Hurst Line Loc. Test mule for Auto Wurks race program