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Transfer case is fine, driveshaft and axles spin, but no tire spin. Any ideas as to why the front hubs would just stop working and what to do to fix them?
Actuator is bad, probably. For more positive engagement, look at the Posi-lok. They're $180 on 4wheelparts.com. It replaces the actuator motor that thermal or vacuum operated with a cable you pull when you want 4x4.
If you want to keep it automatic, the GM dealer sells an updated actuator that is more reliable. You also need a wiring adapter to make it work with your present setup.
I have posi lock, works great. kinda brings the manual aspect back into the picture, but it does give you the advantage of a low range 2wd for backing up trailers and what not at ultra low speeds.
I will compare the prices of the OEM and the Posi-Lok and probably go with the posi-lok, it is alot better anyway, 2 wheel low is a wonderful thing... Unfortunantly I have it now under hte wrong circumstaces...