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Did a quick search on the internet and came up with this as a hit.

http://en.allexperts.com/q/4-Wheel-Drive-2700/94-Jeep-Loud-Whining-1.htm

One Gentlemen had a transfer case full of metal.

I figured you had bearing issue before I did the search. Which leads to the next question in my mind what kind of oil are you using and have you ever checked or changed it. My resources show the transfer case takes ATF.

Once you have it repaired I would suggest looking into a better ATF then you can purchase at Wal-Mart or Kragen Auto parts.

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Q: What causes a whinning noise coming from the transfer case or transmission on a 98 grand Cherokee full time 4X4?
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