Lock Right Locker won't engage!?!?

I have recently installed a lock right in my c8.25. It is the 3rd or 4th Lock right I have installed in as many Jeeps. I followed the owners/Installation guide perfectly. I used 85/140w oil to quiet down the ratcheting that these lockers make. It is all back together. I put the Jeep in drive an it just makes a grinding sound. sort of like being in a manual shift vehicle and missing a gear, just not as loud. It wont go forward or backward. I can just hear the carrier/gears/locker just spinning. I contacted Lock Right tech line as well as visited my local Jeep dealer. Both were of no help. I took it all apart and brought the carrier, locker, shims, EVERYTHING down to a local 4x4 driveline shop and the assembled it on the bench and said everything looks fine. No damage at all. The checked clearances and said everything is perfect. I brought it all home and re-installed it. I got the same results. The locker is not engaging. I am lost with this one. Very frustrated. I just read about a guy who used bearing grease instead of axle grease. He said that was his problem. Could that be? Could it be just the wrong type of grease that would cause it to not engage? I don't know. Help!?!?!? Thanks a ton!::

This could be dumb...

But is your transfer case in 2H? Mine makes a nasty grinding noise if you're in N on the t-case then in D on the trans.

If not, follow these steps.

- Get all four wheels on jackstands
- Pop rear diff cover
- Have someone get in, start it, put it in 1-2. Go no faster than 10 mph.
- Check to see what's going wrong.

Yeah, I have it in 2wd and drive on the tranny. I put it in 4wd and I can drive it in front wheel drive, no problem. This issue is definitely in the locker. Unfortunately, I guess I am going to have to dump another round of new diff fluid and see whats going on. Very frustrating. Thanks for the idea though. ANYTHING at this point helps.