I had mine replaced recently, it may have been my fault. I was at pismo dunes having a blast, I was in 2wd most of the time. I drove into some really soft sand and felt the truck slowing down quick. I decided to slow down and engage 4wd, but I think the front axle was not matching the speed to the rear axle, so I may have caused the failure by engaging 4wd to early. Non the less 4wd no longer worked, the dash display stated it was engaged but truly was not. I took it to the dealer explained specifically that 4wd drive was not working, I did not mention what had happened. They covered it under factory warranty and the transfer case was replaced. I did although feel a clunking noise when I would engage 4wd drive before so maybe it was failing before not sure but the good news I didn't pay a cent.
Thanks Ford Warranty