ABDO- Looking at the transfer case I can see you have the syncronized version of the np205 and your problem is probally in your problematic automatic locking hubs I would install manual hubs which are a bolt on swap and very easy to do and come by. They should be for a internal spline , dana 60 front w/30 spline outer axle shaft.77'-91' 30-35 series.
The only difference is you will have to get out and lock them in when you need front axle assistance!