Ok so I thought I couldn't get into 4x4 and have been driving around for about a month and just found out tonight I have been in 4x4 the whole time. I guess I never really thought about it or worried about it. It did seem weird while sharp turning on dry pavement. Thought it was because of the new 35's. So I have no dash light for the 4x4 and the twisty does nothing. I did install a new motor on the transfer case. I saw that the vacuum lines for the front diff melted from resting on the exhaust. Could this be causing the issue?

 

Yes, I believe you should fix those hoses/lines.