The splined disconnect can have all sorts of internal mechanical failures mostly involving the fork and the collar, and not have any indication electrically of the failure (flashing lights, etc.). That's because the electronic feedback is in the front axle actuator, and if its motor succeeds in pushing out the actuator button, the sensor reports success. But the actuator button has an internal spring so a mechanically jammed disconnect will not break the actuator, so what happens is the spring compresses, the disconnect is mechanically inoperable, but the actuator still reports success to the TCCM.
Cold, congealed grease inside the disconnect can slow down the actuator's success, and sometimes cause intermittent electrical failure reports.
The reason torque can go to the front wheels and the rears don't spin is because the transfer case clutches are like a front-to-back locker. The front and rear driveshafts are going to spin at the same speed, whether that's fast or slow. If all four tires are slipping, they pretty much slip together.
[video=youtube;AheKwL2AYhE]http://www.youtube.com/watch?v=AheKwL2AYhE[/video]
If you're on lumpy trails, with only two wheels having traction, then you need to have a G80 to have any hope of forward motion.
Looking closely at this old video of mine shows when the G80 kicks in, even a spinning FRONT tire slows down.
[video=youtube;24SwmSN0-bI]http://www.youtube.com/watch?v=24SwmSN0-bI[/video]