Well if putting it in 4HI locks the front driveshaft, than likely the transfer case and the transfer case encoder motor are engaging. The problem could be the front disconnect actuator (the electronic black module bolted onto the face of the actuator assembly), the disconnect assembly itself, or the front differential (although if it were the front differential you would probably have a lot more symptoms).
Both the actuator and the disconnect assembly are common failures. In your case it sounds like the actuator may not be fully engaging and you may also have bearing failure in the disconnect assembly.
When switching from 2HI to AUTO, you should hear the motor in the actuator engage for about 2-3 seconds. If it is short and abrupt, it is only partially engaging. If my memory serves me, there is a little electric motor inside the actuator with a worm gear. The motor may be getting weak or the grease on the worm gear has dried up. On one of my previous TBs, I was able to crack the actuator assembly case open (held together with RTV or some sort of sealant) and simply re-greased the worm gear and I got it to function again. If you think that you did have some operation of 4WD, than this is an intermittent condition and the actuator is likely the failure.
The disconnect assembly has a fork with a splined collar that moves back and forth when engaging 4WD that basically connects the passenger CV halfshaft to another shaft that goes through the oil pan that connects to the front differential. This is what mechanically engages the two front wheels together. If not engaged, the shaft that goes through the oil pan will free spin when 4WD is selected and no power will be transmitted to the front wheels. Although, in your case, I would start with checking if the electronic actuator is fully engaging first, that's most likely.
Now, the disconnect assembly is a bad design, because of the height of the motor, they had to drop it such that the oil pan is in the way between the differential and passenger side axle. The disconnect assembly is insufficiently lubricated to last the life of the vehicle, it does not contain gear oil. Bearing failure is very common. This will result in a lot of slop in the CV axle, but keep in mind, there is some sideways movement in this axle, even when the disconnect assembly is in good shape. It sounds like in your situation, you may have both an issue with the actuator and bad bearings. Although, even with bad bearings, as long as the internal fork is not broken or the internals including the collar are not destroyed, it should still engage 4WD. That's why you need to verify the actuator first. But if you suspect bad bearings, don't let it go too long, because you may be able to rebuild the unit. Once the races spin in the housing, they start eating away at it. And, you could be destroying the bearing surface of the axle shaft.
Do some google searches on 4WD disconnect rebuild. There's lots of information on this because it's so common.