04 Suburban AWD Binding

GM transfer cases that incorporate a 4Auto setting require the blue AT2 fluid. My '98 had the same problem, and when I checked the t-case fluid, it had pink DexIII in it. Changed it to AT2 and the binding in 4auto went away.

I'm sure there are other possible causes, but that's the first thing I'd check.

Thanks for the reply. When I noticed the problem on a trip I took it to a dealer. They found ATF in the transer case and changed it (I guess to the blue stabitrac fluid, they pointed that out). The problem hasn't gone away and I've put about 1500 miles on it since then. The odd thing is that the car's owner's manual calls out the Dextron III. ANy thoughts?
Thanks

My owner's manual calls for DexIII, too, but it's wrong. I would have thought that by '04, the general would have corrected that error, but I guess not. It bothers me a little, that they allow that error to continue.

The AT2 fluid has different friction modifiers to accomodate the clutches in the t-case. If changing the fluid doesn't correct the problem, I would suspect there is something wrong with the speed sensors on the t-case, or something out of adjustment on the clutches. I really don't know how to go about troubleshooting this, as I've never had to get that far into troubleshooting this.