np205 won't come out of 4wd?

[SeanPaintsFlames]

I've had this 83 Scottsdale back in my possession for a couple weeks now (spent the first month of owning it at the mechanic's house), and during the initial period of working out the bugs (more like an infestation of bugs...)I'm trying to figure out this transfer case. It's a 205 with the 4hi-2hi-N-4lo shift pattern. It seems that regardless of which gear it's in, I can see the front driveshaft through the shifter hole spinning all the time. Neutral is certainly neutral, so I know that the linkage pushrods are actually doing something inside the case. Isn't the front shaft supposed to be static in 2hi? I was having issues with the crummy hubs not locking when they were supposed to, so maybe one is locked now and grabbing the differential? It has an Auburn limited slip in the front and the case is leaking fluid if it matters! This is my first 4wd, so I'm still learning how these things should work. Thanks!