Possible broken chain in xfer case? That would be my guess. It was probably stretched to begin with, and the strain of driving on pavement (turning corners or curves on roads = different speeds from front to back) made it give out. While on dirt, the traction differential can be overcome by slipping wheels, but it's much harder on pavement. Driving in 4WD on pavement is very hard on xfer cases in these older trucks. But also, do like was mentioned above, check the linkages and detents. Good luck, hope it's not too $$$ to fix.
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