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If the hubs are DISENGAGED and you try to shift into 4x4 while moving you can damage the synchros in the transfercase. That is one way to damage the transfer case. Another is that if you use LOW RANGE without the hubs engaged you can damage the rear end, possibly the transfercase as well...

Two things. One, if you engage the front axle with the hubs unlocked and you are moving you risk damaging the transfer case Two You can apply too much torque to the rear axle in low range without the front engaged and can potentially damage the rear end. This is less likely with the...