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Engine/Transmission (1998.5 - 2002) Tranfer Case want stay in Gear

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My 241 DHD tranfer case jumps from 2 wheel high to neutral while driving. I disconnected the linkage with no success. I also drove it in 4 wheel high with with no problems it stayed in gear. I have searched the forums and have found grinding issues caused by a snap ring. Could this be my problem?
 
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