The electronic transfer case fluid is called AC Delco or GM Auto-Trak II and is light blue in color and thin to the touch. As for the wheels not turning after blocking them, was the drive shaft moving. If it was then the tx case is transfering power to the front. That means the actuator is not engaging the carrier to the axles as in the diagram. If your back on the ground see if you can turn the front drive shaft in 2hi with the engine off. If you can then turn ignition key to on, don't start and listen for the tx case to shift when shifting to 4hi. If you hear it shift then again try to move the front drive shaft. If it doesn't move then the tx case is txing power to the front and the tx case probably is OK.. The problem then lies with the front differential and the only electical part is the actuator. The axles spin as you drive and the carrier stays stopped until you engage 4hi or 4lo, the the actuator extends and pushes a set of forks that move a coupler that engages axles to carrier.

 

would either of the sensors that bold into the transfer case cause any problems like this...not sure what they are...I am assuming that one is a vehicle speed sensor but not sure about the other

 

Not sure but I'll look in my manuals and see what the do. If your not getting any error messages and the light in the button stay steady then the control module would seem to be working and all the signal or voltages are correct. Again my guess is the actuator.

 

I have not seen any service 4wd lights or anything on in it. It's confused everyone I have talked to about it. When I checked the transfer case fluid it appeared to be very black and thin. Could that be causing some of the problem? It just does the same thing in every mode. press the button light changes as it should, you cand hear the transfer case motor and the actuator. Then it starts to pull until you put the weight of the truck on the tires. I am completely confused and wish I had left the truck with the previous owner no matter how good looking it is.

 

when I blocked the front wheels the front drive shaft stopped turning as well.... but the transfer case made no noises like something was broken or anything like that....its like the 4wd side of the transfer case is slipping but how could that be possible when in runs off of an internal chain...if the chain was broken i wouldnt think it would pull at all and if it were slipping i would think a noise would be present...i m just lost at this point
and dont feel like dumping $1000 in a transfer case