The system was a little stuck in mine as well. I was able to free it up with a few good tugs and I make sure I engage it every week or so to keep it working. Hopefully yours will be as easy. Also, the D2 linkage has a cable, not rods like in the D1 so loosening it up might just take some spray at the ends of the cable housing. The Transfer Case section in RAVE shows the linkage as well.

 

Does anyone know if all 04's came with a locking center diff?

 

They all did, yes.