Welcome to the crunch & munch club!
I cannot say that for sure but, most front diff failures will result in the truck being immobile in 4HI-Street mode, and usually there will be no "Service 4WD" message. This is because the t-case will automatically send 100% of the output to the front axle (which is broken)...and take it all away from the rear axle. So to over-ride this feature, you must use 4HI-Lock to move the truck. This will fix both output shafts to 50/50 front-rear and send some power to the rear axle. If you can drive the truck in 4HI-Street mode (grinding or not)...its probably NOT the front diff.
There is no sensor specific to the front diff, so the fact that you have a "Service 4WD" message sort of points to the t-case. Regardless....grinding (diff or t-case) is not good. Its certainly worth taking a closer look. A stretched chain is very common and they do make grinding noises. The very first thing you should do is check the t-case fluid. If it is dark and has metallic dust in it...the t-case will probably need a rebuild. Other things to check:
Can you cycle thru all three transfer case modes?
Does it bind or pop when turning?
Have you verified the encoder motor is functioning when you cycle the buttons on the dash?
Are your t-case buttons free (not stuck "in")?
Have you tried pulling the front driveshaft and driving the truck in 4HI-Lock? (2WD...rear wheels only).
That last trick can sometimes help in diagnosing whether the noise is coming from the front diff or the t-case.
