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Feels like it's stuck in fulltime 4X4

I took the transfer case apart again. Since the little oil filter has big holes in it, a couple of oil channel holes were plugged (one of them was right in the middle of the clutch pack). After cleaning I assembled the transfer case with care, paid attention to how everything is supposed to be and surprisingly it works like it should. God knows how long though...
 






Would incorrect oil in the TC cause the clutches to bind giving this problem of engaging 4x4 when turning or from a stopped start.
Also would the Brown wire mod be the same as disconnecting the TC plug ?(Not as i have done the BWM and problem is there either on or off)

Further, as i have the exact problem when turning sharp L or R it appears that it is engaging 4x4 and staying in there even if i cycle through the switch settings to Lo Hi Auto trying to disengage it
When cycling thro the switch from auto there is no click/clunk (as if it already is in 4x4 Hi) , low does click/clunk and when switching back to Hi there is a click/clunk but nothing when switching to Auto (as it is still in 4x4)

On pulling the TC plug when it is not in 4x4 at all it is fine it is not engaged into 4x4 at all when turning sharp L or R

I know that the switch motor unit does not have any thing to do with lock up with 4x4 but any chance that it could be causing a problem.
 






Yes, brown wire mod is basically the same as disconnecting the TC plug, but BWM lets you use RWD Low :)

Switching to 4x4 Hi won't click/clunk unless you're already spinning the rear tires.

You seem to have an electrical problem - sensors or relay or something.



Now, I have a question about the oil as well. Is Mobil ATF220 suitable for that transfer case?
 






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