In the non-locked positions a 203 sends power to both driveshafts, through a differential. Unlocking the front hubs means that the rig won't move, as all the power will be transferred to the front driveshaft. It's just like when one tire of an open differential 2WD is sitting on ice. Even though the other tire can be on dry pavement, the vehicle won't move as all the power is being dumped to the tire that's spinning on the ice. When you shift a 203 to a locked position the differential gets locked, just as if you had an ARB locker in in. /forums/images/graemlins/cool.gif However, the 203 was never designed to have a 2WD output. It always sends power through that diff inside unless you covert it to a part-time case.
There are some transfer cases on newer rigs that allow part time and full time operation, but they were designed that way from the ground up. /forums/images/graemlins/cool.gif