the expert is WRONG. PART TIME means you use it "part of the time when needed" and it locks the drive train on slick or dry roads. dry will kill it if you go far enough.
FULL TIME is the one you can use on any surface wet, slick, or dry.
X2... he's thinking of an 'all wheel drive' where there is a center differential.
Xenfrog, even if you completely hosed your transfer case, I don't know or understand why you'd have a 'hot oil' smell. Especially after you switched it back...