Those are actually drive slugs and are always locked. What you have is the NP203 fulltime transfer case.
If you just put on manual hubs, you will have part time four wheel drive, but the front drive shaft and axle will still be driven all the time.
Installing a part-time kit in the transfer case changes the shift, so that the "loc" positions are 4WD and the others 2WD. This is said to save wear and tear on the front drivetrain and possibly increase fuel economy slightly.
-- A
Hmmm, interesting. So what exactly does it mean if its full time 4wd? So is it shift on the fly 4wd? If i were to put it in 2hi which is Hi (not hi loc) does the front wheel still spin?With the part time kit installed,the front driveshaft ,differential,and axles wont be turning and that'll help reduce wear and drag,and maybe give a couple mpg better fuel economy..might make steering feel easier too,but thats not really a big deal..
But whether its really worth doing in your case is a toss up--I have found the front axle u-joints lasted longer on full time 4wd vehicles because they dont sit still and end up having one cup get water in it and rust the needle bearings,and it doesn't hurt to have the ring and pinion sloshing the lube around either...
Personally I didn't mind having a NP-203 full time 4wd transfer case,it was nice to just pop in in 4 hi loc and not have to get out and slog thru mud and snow to lock the hubs--especially if you just got stuck in a deep bog or snow bank..
i had no idea that is how those np203 t/c worked,i have learned something new todayThe NP-203 is unique in the fact it also has a "third differential" built into it,so you can use 4WD on hard road surfaces without binding or damage to the axles or transfer case caused by the tires turning at different speeds while cornering, or if one axle's tires are on slick surfaces and spin..it has spider gears just like a differential,and those allow the front and rear driveshaft to turn at different speeds without damaging anything..you still have "power" to all 4 wheels,but only until one tires spins..then all the power goes to the axle with the least traction..
When the transfer case in in "HI" its still sending power to both axles,front and rear,in both 2wd and 4wd..but if either axle's tires hit a slick spot like ice,those wheels will spin,and the other axle will tend to just roll along for the ride..(this is why if you put locking hubs on and ran them unlocked,or you removed the front driveshaft,the truck wont move until you put the transfer case in "loc",or it'll just spin the front output shaft ,which has no resistance..)
By putting it in "loc" you lock the third differential located inside the transfer case,which will then send power to both driveshafts & axles equally,just as a part time 4wd transfer case would...the "loc" position should only be used on slick surfaces or off road where the traction is limited so the drivetrain wont be subjected to extreme forces while cornering ,etc....the tires need to be able to "slip" a little..

The NP-203 is unique in the fact it also has a "third differential" built into it,so you can use 4WD on hard road surfaces without binding or damage to the axles or transfer case caused by the tires turning at different speeds while cornering, or if one axle's tires are on slick surfaces and spin..it has spider gears just like a differential,and those allow the front and rear driveshaft to turn at different speeds without damaging anything..you still have "power" to all 4 wheels,but only until one tires spins..then all the power goes to the axle with the least traction..
When the transfer case in in "HI" its still sending power to both axles,front and rear,in both 2wd and 4wd..but if either axle's tires hit a slick spot like ice,those wheels will spin,and the other axle will tend to just roll along for the ride..(this is why if you put locking hubs on and ran them unlocked,or you removed the front driveshaft,the truck wont move until you put the transfer case in "loc",or it'll just spin the front output shaft ,which has no resistance..)
By putting it in "loc" you lock the third differential located inside the transfer case,which will then send power to both driveshafts & axles equally,just as a part time 4wd transfer case would...the "loc" position should only be used on slick surfaces or off road where the traction is limited so the drivetrain wont be subjected to extreme forces while cornering ,etc....the tires need to be able to "slip" a little..
I wonder what the actual mpg gain is. My buddy is building a 76 blazer with a 203 and I flat refused to swap it to part time. The auto won't be in there for ever and I doubt the mpg will matter with limited mile he puts on. He is planning on a 5.3/465/205 swap so why mess with it.
So i would leave the floor shifter in N for it to be 2WD? I dont see a 2HI position. From top to bottom on the floor shifter i see: L loc, L, N, H, H locThe usual daily driving you'd want to use the 2Hi position--in slick conditions 4Hi will deliver better traction and still allow the vehicle to corner normally--when things get really bad use the 4Hi loc postion,or 4lo loc to lock the third differential so both axles get equal power regardless of tire spin..
I doubt the mileage gain with part time vs full time is more than 3-5 mpg--but in a truck that might get 10 mpg or less in 2wd under ideal conditions that can be a big deal!..but for the average Joe who's only going 10 or 20 miles a day,its not a high price to pay ,for the added traction and safety full time 4wd can provide..if you commute 50 miles to work daily,then it would be..