1999 Montero SR 4H not engaging
 

I have a 99 Montero SR won't engage into 4H. The indicator stays orange as if it is engaged, but I hear a metal scraping sound and a burning smell as if it is trying to engage, but can't. The odd thing is that both 4whcl and 4wlcl engage fine. Does anyone know if this is my transfer case failing or perhaps a broken drive shaft? Any help would be much appreciated.

You will need help from another human. Have them get into the truck, engage 4H while you lay down on the side and look under to see what rotates when vehicle moves. This will give you an idea if your trouble is in transfer case, front diff, or elsewhere.