My wife recently purchased a 2001 Montero Limited. Everything was going great with the car until the last couple of days. Within a two day period she first noticed a grinding sound and today when I got into the car to take a look at it and the problem has become worse. I hear a metal grinding/clunking sound and it feels like it is slipping in and out of gear. I looked at the dash and it shows the two front wheels blinking green and the transfer indicator is blinking yellow. Keep in mind while it is doing this the gear shift in the center consol is in 2H.
Does anyone have any ideas? Any help would be appreciated.

 

To solve the problem in the short term and minimize damage run the car in 4H. Sounds like the vacuum switches are faulty. They are located on the left under the air filter as you look under the hood.

Cheap fix, I did it last summer, just don't mix the vacuum pipes up...

Do a search on here and you'll find the part numbers.