blown diff? .... Answer: YES!

your transfer case is probly a np249 and i has the viscous coupler wich can go bad. when it does no power goes to the front wheels. your best bet is to switch to a 241 or better yet a 231 switching to either of those models will get rid of the VC and should be cheaper. good luck.

oh and do a search for this on www.mallcrawlin.com or www.jeepsunlimited.com