Got to be the transfer case, right?
 

I get a horrible grinding sound when in Hill Descent Control and Rock Crawl in Low Gear. I don't drive it more than 10 feet when I hear this. With terrain response off and in high gear transmission seems fine, everything shifts nicely. I've been fighting to find a dragging noise that I through were wheel bearings, or front axle or front breaks. Now with this new evidence I think it's the transfer case.

It's got to be the transfer case right?

So its not the ABS actuating? If it is the ABS then pressing the accelerator would stop it. If its constant and only in low gear, then guess it could be the transfer case. But HDC and the transfer box are not tied together much.

I don't know exactly what is inside the Transfer Case (i.e. how many parts can go bad and make bad noises), but in my experience, I had a grinding noise that was constant, whenever driving along the road. Whether in Hi Low or HDC was irrelevant, in my case. Of course the noise changed when road speed changed. And over a period of a month or 2, it became steadily worse. I decided to have a new Transfer Case fitted. OEM. By the Stealership. Most expensive repair I have ever experienced. But at that particular time, I needed the vehicle fixed quickly. I am of course making sure that I change the fluid regularly.

I'm with you Dakota about HDC should only affect the brakes. I'm certain it's gears grinding. So bad it feels like if I drove it 1/2 mile something would sheer off or break.

I've got a replacement transfer case and will be installing it in a couple of weeks.

Maybe I have a second issue. I found an old post that HDC was not engaging due to corroded wires on the right side passenger footwell. After they were cleaned up all was well.

When it is in low gears that is when I am gearing the grinding and the same grinding when in high gear with HDC on. Perhaps it is being put into low gear when HDC is turned on.

Regardless, the grinding are gears and not the brakes. Hopefully a replacement transfer case solves my grinding, the original dragging sound and HDC. I will also inspect the wires for corrosion, I've had lots of water in the footwells from the front cowl and sunroof drains.

Changing to low range is a user implemented process, the truck can not do it automatically.

I'd slow down, Ken...
 

Spend some time diagnosing this problem, if it is one at all.
Full disclose, I think that you're observing something normal and just don't realize it.

Either that or your description of the scenario is just gawd awful. To me it sounds like you're hearing the HDC kick in and mistaking it for grinding gears.

Do you hear it when you're on the throttle?