Grabbing on front end of 1998 Explorer

I was just able to check the fluid in the transfer case and it is really dark brown. Is this the problem with the grabbing you think? I know I need it changed BAD so please don't call me stupid..lol... I bought this truck used and have had it for about two years.

Just got through changing the transfer case fluid with a mercon type tranny fluid. I drove it around and did some figure 8's in a parking lot that had shell in it and engaged the 4wd. Ran back on to pavement in Auto 4 wheel and my problem seems to have disappeared. I am going to drive it about 40 miles in stop and go tarffic in Chicago and see if the problem re-occurs. I will let anyone reading this as to my findings. In the meantime if anyone has any suggestions on what to look for please let me know! Thanks!