When in 2 wheel drive the vehicle will go nowhere. The drive shaft spins and when put back into park it will grind gears. It will move if I put in 4 wheel drive. Where do I start

 

When in 2 wheel drive one part of the transfer case is engaged, and when in 4 wheel drive a different section of the transfer case is engaged.
There is a motor down at the transfer case that may not be moving the internal gears to engage only 2 wheel drive It may not be going the full shift to 2 wheel drive. Might be a good idea to check if the motor is shifting the fork as it should.The majority of the time the motor is the problem, Make sure power is getting to the motor when changes are selected. If it is , you might remove the motor and move the fork manually to confirm the motor is the problem.
All this is ,,,,,,,,,,,,it is not a manual shift lever for engaging the transfer case.