This may be a day late and a dollar short, not to mention what I would think to be some level of common sense, but why are you on hard pack in 4x? If the ground below you isn't giving and allowing a slip in traction, then I wouldn't engage the transfer at all. Perhaps leaving the axles locked at various times for any number of reasons is sound, but not running in 4x unless you are on varied terrain or poor weather. This action alone would be enough to wear and tear on the drive train. Leaving any vehicle in 4x, that is not designed to be all wheel drive, will cause undue wear and tear out one of the drive line components. In this case, the transfer seems to have been the weak link, although I find that surprising. I agree with an above comment that perhaps a bearing or U-joint would have been the culprit, unless some other neglect has affected the transfer case itself.
In any event, I hope you have found the problem, resolved it, and will many happy miles.