4X4 grinding from 4H to 2H

I am reaching out to the experts because I cannot figure out my grinding issue. Also posted this on Modify form but figured the issue could go into any section.

Shifting my 4x4 was a little rough/was not a positive engagement. So I installed an Assy link today and followed the video. Shifts much better but I wanted to make sure it went into 4L. With the engine idling, it will move through 2H, 4H, and 4L and back down. However, going from 4H to 2H there is a grinding noise and I can feel the vibration in the shift lever.

97 XJ with a 231. It did have a 242 at some point because the shift bezel indicated that but replaced the bezel and it shifts like a 231 pulse that's what it says on the case.

Possible issues:

Installed the link on the middle hole but noticed the bolt touches the transfer case when in 2H. Does not seem to affect anything but maybe I should go for the top hole? I did reach out to Assy about this but waiting a response.

Has been sitting all winter and driven about 20ft even after the installation?

Need to replace fluids?

Rebuild the transfer case?

Any advice would be great.

Here's how the factory suggests you shift the transfer case and I've been doing this since these things were new and I worked at the dealership. Quoted from the owner's manual. The suggestions in CAPS are mine.

"To engage, shift the transfer case lever from 2H to 4H while the vehicle is moving at any legal speed". I LET OFF THE GAS, THROW THE LEVER, TAP THE GAS AND LET OFF.

4L position: " To engage, slow the vehicle to 2-3 MPH , shift the transmission to Neutral, then shift the transfer lever to the right and pull firmly rearward to 4L".

TO SHIFT OUT OF 4L, SHIFT THE TRANSMISSION INTO NEUTRAL WITH THE VEHICLE STOPPED, SHIFT THE TRANSFER CASE LEVER TO 2H, THEN THE TRANS TO D IF YOU HAVE AN AUTOMATIC, OR INTO FIRST GEAR WITH A MANUAL, AND CONTINUE ON.

I have found it easiest if the vehicle still has some movement (like just barely rolling) but not stopped.

It's absolutely supposed to have movement!!

It was designed that way.

cruiser54 said:

Here's how the factory suggests you shift the transfer case and I've been doing this since these things were new and I worked at the dealership. Quoted from the owner's manual. The suggestions in CAPS are mine.

"To engage, shift the transfer case lever from 2H to 4H while the vehicle is moving at any legal speed". I LET OFF THE GAS, THROW THE LEVER, TAP THE GAS AND LET OFF.

4L position: " To engage, slow the vehicle to 2-3 MPH , shift the transmission to Neutral, then shift the transfer lever to the right and pull firmly rearward to 4L".

TO SHIFT OUT OF 4L, SHIFT THE TRANSMISSION INTO NEUTRAL WITH THE VEHICLE STOPPED, SHIFT THE TRANSFER CASE LEVER TO 2H, THEN THE TRANS TO D IF YOU HAVE AN AUTOMATIC, OR INTO FIRST GEAR WITH A MANUAL, AND CONTINUE ON.

Click to expand...

cruiser54 said:

It's absolutely supposed to have movement!!

It was designed that way.

Click to expand...

I will admit I was in my driveway and did not shift while moving. I drove forward and back about a car length a few times but that did not change anything. However, I would have figured if I was in neutral and 4L and I shift to 2H it would not grind between 4H and 2H. But maybe I just need to drive it around the block and see if the issue is still there.

The grinding reminds me of if you are driving a manual and you dont have the clutch in all the way when trying to shift gears.

I would at least drain it and get some fresh ATF in there!

With my AW4, the shift is always iffy going through 'N'. One have to get the speeds right, like shifting a manual shift vehicle without using the clutch. With the AW4 in gear, there is always a drag on the output shaft even if the vehicle is not moving.

Going between 2 high and 4 high and back I simply let off the gas for a second while shifting it firmly.