Sounds like the actuator isn't completely pulling the transfer case all the out of 4 wheel drive and under load, It's popping out. Hence, the bang which is common. This would also explain both hi and lo lights on at the same time. Here are the instruction son how to change the encoder motor out. Check out the diagrams (Below). Please let us know what happens.
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Wednesday, December 10th, 2008 AT 3:50 PM