So: bad news: the system warning light won't go off but good news: the 'seizures' have stopped.

Ok...I've done lots of searching around this (great) site and have found several not so subtle hints that the '90 era 4matic system is rather suspect...

My guess is that I have a problem that many others on this forum have reported, that the Transfer case has packed it in, but I'm only guessing....There's no obvious signs of leaking, but I would like to check the level of fluid just to be sure...anybody know how?

In the event that the system is kaput, can one continue to drive it as a 2wd vehicle? I have NO appetite to blow 5 large on a repair, especially if the car can operate fine as is...but I worry that I could be damaging something else that will result in a real problem down the road.

I know how to take the 4matic offline (test mode?)...should I or should'nt I?

Any wisdom appreciated>