I may have figured it out last night. I am looking to drain the transfer case to see if there are shards in it. If there are than the 4-wheel drive is out. I would take a look at yours. It is one of the things that commonly go out on our model of vehicle. I remember smelling burning around the time it went out, and while I have noticed no leaks (except in the exhaust). It makes sense. Plus, the fluid needs to be changed in the transfer case (called the PTU in other systems)/
This is the link to the notes I found about someone having similar problems to mine. It is fairly complete as they came back online to talk about it regularly. I hope this helps you. Unfortunately, it doesn't seem to be a cheap fix as even RockAuto is looking at $1000+ with core charge.