I've had my 2004 TJ (automatic) since 2005 and have never had a problem. I love it! However, 2 days ago it started making a "grinding" noise...almost like there was something underneath that it was dragging. A few hours later, I put it in reverse and it did go in reverse, but the grinding/dragging noise was loud. I put it in drive and it didn't move...it was like the wheels were locked up. So I put it back in park, then drive again and it started moving, but with the sound. It was so loud I decided not to drive it out of the parking lot.
I took it to a service center down the street (didn't want to drive too far) and they could not properly diagnose the problem. They said either the transmission or transfer case. They priced me over $2,000 for a rebuilt transfer case, but are not entirely sure if that is the problem. They said when they put it in 4wd the noise got louder.
Has anyone had this problem? Or heard of this problem? The transmission has not been "slipping" and I have been using 4wd lately due to snow.
(Sorry for the lengthy post...just want to include details that might help.)