Personally, I leave the transmission in high gear and the transfer case in neutral. The transfer case will lubricate, since the driven shafts are under the oil. However, with the transmission in neutral, there can be some centrifugal spinning through the transfer case, and there is no oil thrown by the upper output shaft. It is possible to burn out the little rollers between the input and output shaft. With the transmission in gear, there is no spinning of the gears in the transmission.
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