It is common for the Transfer case to not release completely.
When switchng from 4WD to 2WD, I recomend backing up a bit, then going forward.
They are right, you do not have locking hubs.
Early Cherokees had a vacuum disconnect on the passender side which moved a coupler to release the passenger side axle. After a while, Jeep decided that the friction of one axle turning in gearlubs was about the same as two axles spinning in gear lube and deleted the assembly.
True manual hubs are very expensive to install, and not considered worth it for day to day driving.
Transfer cases are either full time, or part time. The part time box has positions 2HI, 4HI, N, 4Lo.