With both front wheels off the ground, rotating one tire will either cause the other tire to rotate in the opposite direction OR the drive shaft will spin, whichever has the least resistance. You have to engage the lever to hold the driveshaft still to test front diff.
That makes sense.
It did the same thing regardless of where the 4X4 lever was placed IIRC.
Hopefully it is just not engaging at the transfer case. Shop said they'd have an answer pretty soon.........