Hey Mark I had that happen to me just after I bought my Yukon literally. I flew to Flint Michigan and was an hour and a half out of Flint when the Yukon seemed to miss once then I lost everything. I was able to coast to the top of the freeway exit. I wasn't sure if it was rearend, tranny, or transfer case so I went through all the gears nothing, tried putting it in 4 hi. no-go, 4 lo and I could crawl off the freeway. Well I got a hold of the broker and he had me towed back to Flint (his dime) set me up with a tranny shop he deals with and split the cost of the re-build (wholesale) ended up being the fork in the transfer case. The new shaft was too long so after trying all kinds of different things we just cut the shaft of the new one to the exact lenth of the old one and voila I'm down the road after a full tranny/transfer case rebuild costing me around $850 or so. The tranny guys said this is common in these transfer cases as they loose their oil and the forks get chewed up.
Phil
2007 Metallic Blue GMC Crew Cab 2500HD LBZ Allison. 70K mi, 255/85r16 tires.
1996 GMC 2Dr 4wd Yukon 190k mi, 3.42 rear end, 265/75r16 tires, 4l80e, 97 cooling mod, D-max fan blade, Hayden Severe duty fan clutch, Autometer Boost EGT Tranny temp, JK's 3.5 exhaust.
Reno NV.