Would a loose pinion nut cause these problems as well? Had the pinion seal replaced so it's possible it loosened up. It's leaking again and the yoke has play

 

If your rear axle is blown, the driveshaft will spin but the truck won't move ... and it will drive in 4x4.

What's going on certainly seems odd, are your hubs locked when you are shifting the transfer case? Auto hubs? Something could be busted in the case as well.

To be clear, 1-2 Shift fork is indeed worn out?

 

Yeah for sure the shift fork for 1 and 2 is gone. No the hubs are free. Manual hubs. Rear end is good since it doesn't spin unless driven. It's just when I move the transfer case lever to 4H back to 2H everything works fine. I just thought maybe the pinion nut being loose had something to do with it.

 

And since the hubs weren't locked in I kept the clutch in so I wouldn't tear anything up

 

You can ride around in 4x4 without tearing up your hubs, it's a good option for these trucks to back trailers up in 4low which is "2low" with the hubs unlocked.

 

What do you think could be causing this? Rear diff is leaking at the pinion seal as well

 

But I think that's because loctite wasn't used on the pinion nut. That's why I thought that could be the issue