I think it would be weird for the transfer case to be the issue when the noise is in the front?
But as Jamas said, noise travels weird, put it up on 4 jack stands and see if you can replicate the sound while you stand outside. That is how I figured out it was my Trooper's rear wheel bearings vice the differential. It really sounded like diff noise inside the truck, on stands, it was obvious it was from the wheels.