'91 Fourtrak 2.8 TDX
On mine the dash switch (4H) is lit when not engaged (switch is in the out position), when the switch is pushed in to engage, light is not visible, but a symbol marked 4WD comes on in the rev counter area.

Check the tension on the P/Steering belt, squeal is usualy apparent, due to a slack /worn belt slipping when on full lock, due to the pressure in the system . Belt can look okay but be worn so it will not to grip the sides of the pully, thus slipping giving rise to the squeal.

With a part time 4x4, discretion/experience comes into play here, if you can manage with 2WD stay with it,this is due to front axle transmission wind up, as on hard surfaces which do not allow any wheel slip can destroy the transmission, loose gravel, mud, snow, heavy slush okay ( with intermitent surfaces as snow /slush/clear tarmac I deliberatly drive in the slush if I have 4Wd engaged to allow the front axle to release any wind up)

But I will bow to others with more experience than I, or to give a clearer explanation

Edward.