Check to see if it is throwing any codes. I know of three but I cannot remember them, I know one is a sensor code. It could be something as simple as changing the fluid in the xfer case. Sounds too simple but it may work. Good Luck.
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It is your 4 x 4 electronic shifter at fault. Located on your transfer case it is mostly black/brown plastic electronic switch that engages and disengages your transfer case from low, high 4 x 4 or 2 wheel drive.
Check connections for electric continuity and replace it if there is no power...
I believe that Mitsubishi has one of the best and easiest 4X4 selector systems on the Pajero/ Montero. Just below the gear shifter lever is the 4X4 mode selector. A lever like the gear shifter that works in a up, down movement. On your dash board you will notice a sort of axle, chassis diagram in green light. In normal 2WD or 2H mode the lever is set all the way back and on the dash only the rear wheels a lite up in green light on the axle, chassis diagram. This is for normal driving on the highway and smooth roads of dry dirt roads. Pushing the lever up wards while moving at crawling speed will engage the light 4X4 mode which is 4H for when the driving gets a little slippery. All 4 wheels on the axle/ chassis diagram will be lite green. Shifting the lever from the 4H position to the left and upwards will engage the 4HLc mode for 4X4 on sand and deep snow. This will also engage the central diff lock which will show on the axle/ chassis diagram on the dash board with the center box also lite up. Further up from the 4HLc mode and while pushing down on the 4X4 lever push it to the top most position, but only do this when at a stand still with your foot on the brake pedal. This will engage the 4LLc mode with 4X4 and central diff lock on for when driving gets sweaty on thick mud up and incline. To disengage this mode stop, foot on break put it in P and then pull down the lever to one of the lower settings.
I was researching the recalls for the 2002 tundra and havent found any recall pertaining to the 4whl drive. Sometimes when people have their 4wheel drive locked in and drive on pavement for any length of time, whether it be just a couple of feet or a couple of miles, over time it creates a binding of the gears in your transfer case. Once the bind is so great, the engaging and disengaging starts malfunctioning and leads to bigger problems overall. I could be wrong about this being the problem that you have but I think its something to look into. It wouldnt hurt to put your vehicle up off all fours and release the bind if any by running through the gears while in 2 and rour wheel drive while all four tires can move freely and release. See if that works for you. Check your gear oil front , center and rear and use much caution when attempting this suggestion. Also refer to your owners manual troubleshooting section for other possibilities. Merry Christmas. By the way, the electrical switch should be covered in the troubleshooting section also.
Hi, You will need to take to mitsubishi dealer and have them scan your diagnostics. But this is a common thing in montero's and it sounds like o ring (which is plastic) in transfer case has busted. As long as it switches in and out of 4 wheel drive it is ok to drive. If it doesn't, dont drive it...it could cause alot of damage.