Originally Posted by Rzeppa
It is abundantly clear that this is a front drive issue, and I can't think of any reason why high/low would affect it, especially with the dual sticks, along with the observation that it shifts into low range and operates in low range.
As Randy said, double check that the hubs are engaging before delving into the transfer case. An alternative method to check this doesn't involve driving or even running the engine. Just jack up the front end and turn a wheel with the hubs locked. If they are engaged the other wheel will turn (opposite if open, same if locked), if not then it is the hub(s).
If the hubs are engaging, then crawl underneath and have an assistant operate the front drive stick and observe the shaft go out and in (out is front drive, in is front disengaged). A lot of times things become obvious when you just look at them.
I know what he said earlier, but I wanted to be 100% certain about having "twin sticks" to make sure we were all on the same page after the comment about "it could be a vacuum issue"