Help with my suburban please

[Highway Star]

Thanks for the advice. I didn't take notice as to whether the other side spun when I turned one either of the hubs. It has open carriers, no G80 locker or G86 posi units...in case that makes a difference. When the manual 4wd is placed in 4hi, the sound is gone. The 4wd indicator light blinks, but the grinding noise goes away. This makes me think that it is the actuator, like Hank initially suggested.

That is my gut feeling, after having a little more understanding of the mechanicals. I think the actuator isn't disengaging the front drive when shifted back into 2wd. Isn't there a fork in there too?
I think this is a schematic of the front drive system in my 'burb.


All of the part numbers are listed here:

A friend told me to pull the front driveshaft and see if that makes the noise stop. I'm feeling like it will still grind, because its the CV shafts that are making it grind. Someone else told me that I should pull the actuator and see if the noise goes away. I'm not sure what that will accomplish or prove.

If I pull the front shaft, will I lose fluid from the t-case or front diff? I am clueless, and really want to try and fix this, or at least buy myself some time to figure out how I'm going to get the $ to fix it right.