Need to clarify a couple things.
The BW1356 is the only transfercase used from 87-95 that I was aware of. There may be others, but you said you had the 1356 so let's work off that.
The 1356 has no provisions for an electric clutch or any electronics inside the case itself.
For actuation you had two options, electronic shift or manual shifting. Usually the half tons got the electronic shift while the 3/4 and 1 tons got the manual shifting. I have no idea why.
Shift on the fly simply comes from driving with the front hubs locked in. If they are locked the front driveshaft will always be spinning at the proper speed to engage and disengage 4x4 whenever you want.
The automatic hubs, if you still have them. Engage when you put in 4x4 and do not disengage until you change direction. Allowing you to go in and out of 4x4 as desired.
You could very well have electrical issues causing your transfercase to go in and out of 4x4.
I am pretty sure on my son's 94 we took the shift motor off and manually shifted it to 4x4 and drove it around to verify it was electrical and not mechanical.
It was electrical. After repeated attempts at replacing the motor and control module multiple times. We did not resolve the problem until we got a shift motor and module from the same donor vehicle. Not supposed to mater, but it did for us.
On my 1995 1 ton that had a failure, it would pop in and out of 4x4. Maybe skip was a better word. It is a manual shift. That failure was from a broken shift fork, which actually was from a failed **** pump. I am not sure what year they changed over, but my 1995 had plastic shift forks. The used TC I bought for parts was from a 1988 and it had metal shift forks.
Here is a parts breakdown of the 1356. Pretty simple. Just have to narrow it down between electronic or mechanical failure by manually operating it.
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