2001 2500hd 4x4 grinds while in 2wd high

[cdub2010]

A new to me 2001 2500hd with a manual shift 261hd I assume. Drives fine in 4hi and 4 lo, but when case is in 2 hi it grinds. The transfer case shifts fine it doesnt grind while shifting just whne the truck is moving forward. I have only shifted while stopped with the clutch engaged, not on the fly. Im wondering does this sound like a transfer case problem or an axle acuator problem? Never had problems with any thing newer than an 87 4x4.