With a cracked transfer case, it's pretty much guaranteed that's your problem. If it pulls while you are holding the handle down, I'm going to say something is wrong with the linkage. Maybe the previous owner hit something, cracking the transfer case and damaging the linkage inside or maybe the linkage is binding up and put a crack in the housing. If you end up keeping it and fixing it, you're going to want to replace the transfer case if you want any kind of longevity out of it. It won't take long for dirt and rocks to find their way in there and lock it up. If it's a small crack you may be able to weld it or put some JB Weld on it for a quick fix. Good luck with it. It looks pretty good to have 230,000 miles on it!
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