Appreciate info ,here's what's confusing me is I have encoder motor off,shift shaft I turned counter clockwise fully,and rear shaft n front shaft spinning,pulled back and went forward.havevto get fluid in front diff n check tc fluid before I go around block,Sounds like the front diff is smoked...or possibly a CV shaft. Drain the fluid and look for chunks or shavings on the magnetic drain plug.
The H3 is a full-time 4WD, and therefore both driveshafts spin all the time. In 4WD-Street mode, the transfer case will send the power to axle with the LEAST amount of resistance. In your case...that would be the front axle (broken = no resistance). If the front driveshaft spins, and the vehicle does not move...then the problem is definitely downstream of the transfer case (in the front axle somewhere). What you say is true. You should be able to shift to 4HI-lock mode and at least move the vehicle. But that can sometimes be difficult to do with a broken front axle. That grinding you describe when going into PARK is because the front driveshaft is free-spinning. You need to shut the vehicle off to shift transfer case modes!!! The t-case requires some time to engage...it is not instant. Try rolling the vehicle very slowly (under 2mph), with the motor off, ignition on...and press the 4HI-Lock button. This should engage the 4HI-Lock mode and send power to the rear axle. DO NOT attempt to put the trans into park in 4WD-Street mode...that grinding sound is the PARK pawl. If you continue to do this you will need transmission repair.
I currently have a used drop-out front axle in perfect condition. Its aluminum case, single-track, 4.56 geared. 155k miles. No issues...plug & play. $550 plus shipping.
Thanks for heads up on the park(pawl) thing,I don't need extra problems