It moves through ever position just fine, but I'm not sure if they're actually switching or not (first 4wd I've owned). When it wouldn't disconnect, I would floor the gas for a sec, slam on the brakes, and repeat and it would knock it loose out of 4wd somehow. I dont' have anything on the front axle so I guess its not a 231. I'm pretty sure I checked the linkage when I first tried out the 4wd but it was physically moving to 2wd position, it just wouldn't disconnect.
If the driveline is a bit bound up, it usually works best to stop and reverse if you have the opportunity. If you have to do it while moving, try putting the transmission in neutral before hitting the brake.
If you felt the difference when it popped out of 4WD, then you at least know that the 4WD was working, and the linkage is good.
It is still possible to have a 231 ("command-trac") and no disconnect, if someone before you swapped in a post-91 axle, or the axle from a selec-trac model. If they did that, it would disable the 4WD light, which operates from vacuum, unless the switch in the transfer case was replaced. Does your 4WD light work? If so, what kind of switch is on the TC?
If you really do have a command trac 88 with a 231 transfer case but no vacuum disconnect on the axle, you should do some further investigation if possible to see whether the axle is contemporary, because later axles used different brakes, and it could be very frustrating trying to buy brake parts without knowing what vintage axle you have.
If possible, take a wheel off and look at the brake calipers. Your vintage of axle should have a separate caliper bracket bolted to the knuckle. Later ones have the caliper bracket and slide integral with the knuckle. They use different calipers and different pads.