grinding noise in 4wd

[rideak]

I have an an 02 F350 Powerstroke 4x4 that I bought a few months ago. It has about 130k on it. I have read through this forum for hours but no one has anything similar to the problem I am experiencing. Any help would be greatly appreciate.

I live in Alaska and I use my 4wd alot. I have manual hubs, auto trans, "push botton" 4wd. A few weeks ago, I started hearing a grinding noise coming from my drivers side from while in 4WD. If I switch it out of 4wd, it goes away. I went ahead and jacked up the front of my truck:
- I know it's not the wheel bearings - no play.
- My wheels will turn a little bit back and forth before the u-joint on the axle starts to spin - more so on my passenger side than my drivers. Not sure how much play should be in there?
Last night I went ahead and UNLOCKED my hubs but switched my 4WD on - thinking I isolate it to my driveshaft or something in the axle. When I did this - with my hubs UNLOCKED, it still acted like I was in 4WD - I couldn't get it to break loose on the slick snow and when I turned, it still feels like it is in 4WD. So now I'm thinking a bad hub possibly. Any help would be greatly appreciated. Thanks!