Transfer Case Encoder Installation Problem

bheston · March 14, 2011

Hello, I'm new to posting on the site but appreciate all the knowledge that gets shared here, I'm hoping someone can help me out on this one.

I recently purchased a 2000 GMC Sierra 1500 4x4, the 4WD was working fine, I had switched it 2HI to 4HI several times with no problems. Last week I tried to shift to 4HI and it didn't want to go at first but after a couple tries it did, but then would not shift back to 2HI. [service 4WD] light was on, dealer wanted $85 to read codes, local AAMCO shop did a free diagnostic and gave me these three codes:

U1026 - Lost communication with transmission control system

C0323 - Transfer case lock circuit low

C0387 - Unable to complet shift

They diagnosed the problem as a bad transfer case encoder and wanted $890 to fix it. I can't afford that so I bought a used one for $75 and would install it myself. The install should be easy but I've run into a snag. When the old encoder came off, the T case shaft had pressure on it, and turned when the encoder came off. Now my new one doesn't line up. Everyone I have talked to says just turn the shaft but I can't get it to the right position. Looking at the shaft when I go fully counter-clockwise that appears to be neutral, then I can click one notch clock-wise, but that isn't far enough, needs to turn more cw but from there it is spring loaded, when I turn it just turns back, there isn't another notch to move the T case shaft. I have the back tires off the ground, front drive shaft is out, tranny in neutral, I can spin the rear drive shaft and make sure there isn't any pressure on anything.

I thought the T case should have 3 positions: 2wd, 4wd, Neutral; but I only have two positions, how many positions should I have when I am turning the T case shaft with a wrench?

I've been told not to connect the wiring or try to turn the encoder without it being installed, is there any other way to get the shaft to line up? Does it seem like I have another problem inside the transfer case?

Thanks for the help guys!

bheston · March 22, 2011

I did solve this problem and wanted to post the solution for any others that may run into it. Thanks to someone on another site sending some wiring schematics of the transfer case wiring, I was able to do some testing with a multi-meter and locate my problem, which turned out to be a bad wire that provides power to the encoder lock circuit. I tested all of the circuits that run the transfer case encoder for continuity and voltage where appropriate. I found that the encoder locking circuit did not have voltage when it should have (voltage is applied to the locking circuit to engage a solenoid within the encoder which releases the lock and let's the encoder turn). The encoder lock circuit gets power from the fuse block in the engine compartment. The ATC fuse powers both the lock circuit and also the t-case shift control module located in the dash. The module had power but the lock circuit didn't. I partially removed the fuse block and found the ATC fuse splits out to two leads, which were both hot at the fuse box. I had a problem somewhere in the wire harness between the fuse block and encoder motor. The harness was nearly impossible to trace, and I soon gave up and ran a new wire (cut at both ends and soldered in new wire), which quickly solved my problem.

gmtech4 · May 4, 2014

soooory ,you used wrong terminology and there is no lock solenoid ,,,,,whatever ,you think what u think sir ,,,,14 yrs as a GM tech means i know more than you ,,,ive been inside more t cases than you can fathom ,,,stick your attitude buddy

00Silverado4x4 · May 5, 2014

All right, everyone has had there say and all problems with the vehicles have been solved. Now let's cool down and move on. I am locking the topic since there will be not need for any additional comments.

bheston · March 15, 2011

An encoder problem will almost always set a c0327.....Almost sounds like your t-case has an internal problem. With wheels scotched and trans in neutral, you should be able to shift the t-case wtih an adjustable wrench. Its tricky to get the shaft to stay in the correct position for the encoder motor to slide on though.

Can anyone tell me when I am turning the transfer case shaft with a wrench, how many positions or detents should it have?

gmtech4 · May 2, 2014

you;re way off base ,,,,,

get the code diagnosed or find the code and follow it untill ya cant anymore ,,,

your jumping to inexperienced conclusions ,,,,so dont do that

steelz22 · May 2, 2014

ok, so what tests can I do with my meter to find out where the short is from the TCCM to the transfer case lock solenoid? Thanks!

bheston · March 19, 2011

Still working on this one, here is an update and could use a bit of advice on wiring.

A friend put me in touch with a reputable transmission shop, after telling them the trouble I was having getting the encoder installed they quickly explained what had happened. The truck was in 4WD when I removed the encoder, there is a clutch in the transfer case that has pressure on the shift fork (why I was coming against spring pressure when turning it), and the transfer case actually shifted itself back to 2WD when the encoder was removed. Now I had an encoder in 4WD, and was told that you CAN NOT install an encoder that is in 4wd, impossible to do. Only option was to connect it to truck wiring, ground encoder to chasis, push 2hi button and let it shift back to 2wd, even though you aren't supposed to do that as it may damage the encoder. Shop said you don't have any other option and they have done it before. I tried this with my original encoder, motor hummed but encoder didn't run. Tried it with my new encoder, again motor hummed but encoder didn't run. Thought I may have bad encoder, junk yard traded me for another one (which also happened to be in 4WD position!). Same thing, motor hummed but encoder didn't move.

I talked to the shop again, they then thought the shift module could be bad, junk yard had one for $40 so I put it in tonight, tried it with both encoders again, same results, motors hum but encoder doesn't move.

Before I bought the module I tried to do a continuity check on the wires from the Tcase control module down to the encoder, but had limited success. The heavy gauge black and red power wires had continuity. The other two wires in the same connection on the encoder were a different color than the other two in the 4 pin module connection, and did NOT have continuity, they apparently don't go straight through. Chilton book doesn't show this wiring in the wiring diagrams, so I don't know where these other wires go. Can anyone provide a wiring schematic that shows the wiring between the Tcase control module and encoder? Is there a place I can check continuity on these wires or any other way to test any of the components?

I am going to call the second transmission shop again in the morning and schedule a diagnostic with them (first diagnostic at AAMCO transmission didn't impress me much).

gmtech4 · May 2, 2014

what has lead you to still think that a wire is shorted ?

what the heck is a tranfer case lock solinoid ?

you are wasting your time sir !!!!

stop it ,,,you have no clue what you're doing,,,,sorry

steelz22 · May 4, 2014

I do know what I'm doing apparently you have never seen a transfer case before if you don't know that the transfer case lock solenoid allows the encoder motor to operate to change between 2wd, 4Hi and 4Low. I did fix the problem, it was a shorted wire in a wire harness under the fuse box. So your way off base, I had the diagnostic code but needed a little help with narrowing down the issue that caused the code. Next time some one has an issue, your better off not to respond if you don't have any insight except to tell them their inexperienced and don't know what their doing. Thanks for your help sir!

gmtech · March 14, 2011

An encoder problem will almost always set a c0327.....Almost sounds like your t-case has an internal problem. With wheels scotched and trans in neutral, you should be able to shift the t-case wtih an adjustable wrench. Its tricky to get the shaft to stay in the correct position for the encoder motor to slide on though.

steelz22 · May 2, 2014

Hi, I have been searching awhile and finally came upon this post. I believe I have the same problem. My service 4wd light is on. I'm pulling code C0323 which is transfer case lock circuit low. Truck is stuck in 4wd Hi when i try to switch it back to 2wd I hear a buzzing sound under truck, but it switches back to 4wd Hi. I have checked continuity of transfer case control module in dash and it shows that is not the problem. I don't want to replace the encoder motor if there is nothing wrong with it. When I check for voltage at the encoder motor wiring harness I'm only getting a reading of 4V with the ignition on (nothing when ignition off). I believe I have a short in the power wire from the electrical center (under hood) to the encoder motor wiring harness. How or where can I check to narrow down exactly where this problem is located? Can I check for continuity from the ATC fuse to the encoder harness pin? If not, how do I begin to remove the electrical center (under hood) to access wires below? Thanks in advance for your help!