Need help diagnosing a clunking noise (it will go away if I switch from 2WD to 4WD)

[tmurr]

I'm trying to diagnose a clunking noise in my 96 Explorer that seems to be coming from the front, or possibly under the drivers side. It typically occurs at slow speeds, while leaving a parking space. When it occurs, it is a consistent clunk that sounds like it happens with each wheel revolution.

If I turn the switch on the dash from 2WD to 4WD Auto, the clunking noise stops. If I switch it back to 2WD, the clunking returns. Eventually, it will go away. Is this a transfer case issue?

I recently replaced the rear tires only. Front tires are worn, but still have decent tread remaining. Could this be a cause?

Thanks,
Tim

1996 Explorer XLT
Control Trac 4WD
(switch on dash: 2WD, 4WD Auto, 4WD Low)