4matic problem please help
 

I have a 1990TE 4matic wagon which needs a new transfer case. Mine went bad and was jumping hard when stopped in drive. (I posted previously on this) This continued even with the 4matic turned off. Changed the transfer case fluid which was a mess of hydraulic fluid/trans fluid and the problem went away. (4matic is still off) Now after a 150 mile trip, the problem is back. My question is this...I thought that the 'test' lever would totally disengage the 4matic system, that the car could be driven even with the bad transfer case in this position. I'm going to replace it, but I was hoping to not do so immediately. Any help would be greatly appreciated. Thanks!