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I HAD A BLAZER WITH THE SAME SYMPTOMS REPLACED THE TRANSFER CASE MOTOR AND SOLVED PROBLEM. TRANSFER CASE MOTOR SHIFTS FROM HIGH TO LOW GEAR IN THE TRANSFER CASE AND TELLS THE FRONT ACTUATORS TO INGAGE FRONT HUBS . MOTOR WON'T MOVE TO 4 HIGH AND GRINDS WHEN TRYING TO MOVE TO 4 LOW, TRANSFER CASE MOTOR FAILING . CHECK VACUUM LINES AND ACTUATORS ON FRONT DIFF THEY FAIL, CAN CHANGE TO CABLE ENGAGEMENT INSTEAD OF FAILURE PRONE VACUUM ACTUATORS.
I had the same problem after my car went into a transmission shop for some service. This might be the solution, it was with my car. Check the transmission shift cable. When mine finally failed, it was filled with rust. You may be able to simply lubricate it somehow with something like WD40, but I'm not sure if it would work. If all else fails, you can have the shift cable replaced, which is what I had to do with my car after driving it for 2 years with that problem. By then I had worn out and warped the shifter and had to replace that too, as well as drive it around for a week without being able to get the transmission into park. Good luck! If you have to take it to a shop, just tell them that your shift cable is going bad and you want them to make sure.
When the car is just cruising along at approx.50+ MPH push the O/D button. You should feel the gears change higher and if you have an RPM guage then it should drop as well to fewer RPMs. This would be normal driving conditions. O/D will not kick in until the last regular gear (3rd or 4th depending on model) had been shifted into. O/D automatically kicks out when slowing down and the transmission shifts to a lower gear. Thus the O/D has no function at slower speeds/gears and does not need to be shifted ( on or off ) except in the very first example given here.