Changing from four wheel drive to two wheel drive

It may be from the wrong axle ratio. The front and rear must be the same ratio or you get t-case windup which it sounds like. If either axle was replaced gear wise can cause this. If you open up axle it should be stamped on ring gear if stock what ratio it is along with a tag on right rear on rear axle. It may also be your automatic hubs are not unlocking so check those for wear.

Have seen the same problem on a few GM 4X4's. (My 2002 Blazer is currently a sufferer of it, just do not want to tear into it now).

On the ones I have repaired it was due to the front axle interlock not releasing properly. It causes pressure in the drive line that does not allow the T-Case motor to disengage the case. Then the coupling finally slips enough that the splines uncouple. The T-case makes a bang as the torque is released. On most of them the actuator seemed to be the initial cause of the problem. It was not engaging properly and damaged the end of the splines so the collar could not slide freely.

On my Blazer you can see and feel it when it releases, Feels like you hit a low speed bump and whacked a garbage can at the same time.

It sends a big shock through the transfer case and can break the chain or damage the front axle. On customer vehicles I generally use OEM repairs.

On yours it has the wax powered unit which is real easy to replace, it is literally a five minute job. But if it is internal wear that likely will not help.

It can be replaced with a cable or you can go the other way and install a plug that locks the front axle full time. On mine I am going to be changing the vacuum axle unit out for a more reliable mechanical cable control.