Just as I thought, the TC shifter wasn't functioning. After removing the inverted boot I found that the shifter was just sitting in the shift box not even bolted in!

What is really a pisser is that the driveline shop that worked on it for my brother, cut the driveshaft because they said it was too long and caused damage to the adapter between the TC and trans, then they told him that they tested the complete 4WD system and everything was working perfect! There is no way these guys ever got the Jeep in four wheel drive with the TC shifter unbolted.