All the above explanations are basically correct, but I think folks get confused about how all the differentials work.
- All RWD vehicles have a differential in the rear so that the wheels can easily run at different speeds to go around corners. Some may also have the Gov Lock option to increase traction, but that's another discussion.
- If you have a front axle (like a square body 4WD) it has the same type of differential for the front wheels.
When you add a transfer case in the middle you now have the possibility of the the two driveshafts running at different speeds. With standard 4WD (NP205, etc.) this means you either have to be on a slippery surface (mud, snow, etc.) to allow for the different speeds, or you need to leave it in 2WD.
If you use a stock NP203 it also has a differential in the transfer case, and that allows the front and rear driveshafts to run at different speeds, so you can run in on pavement and leave it in "Hi" or "Lo". However, if you put it in "Hi Loc" or "Lo Loc" it locks the transfer case differential so that both driveshafts run at the same speed, and then operates similarly to the NP205. The Loc positions should not be used on hard surfaces.
If you convert an NP203 to part-time operation you would use one of the kits that replace internal pawls or the internal shaft to disable the differential capability so that the Hi and Lo positions are now 2WD and Hi Loc and Lo Loc are 4WD. However, when in 2WD position you don't get full oil circulation through the transfer case, so you are supposed to run it in 4WD about once a week to ensure full lubrication. AFAIK the NP203 internal shaft conversion kit is no longer produced, so the lighter duty pawl kit is the only one available.
Bruce
