Ford: Stuck in Low Range 2-Wheel, shift on the fly, power stroke

Question
Hey Randy: Got an F250 Power Stroke.  The "shift on the fly" has not worked for some time.  I let a friend use the truck, he gets stuck and needs 4-wheel drive.  He finally figures out that he needs to lock the hubs but in the process he uses the selector knob and drops it into 4-wheel low.  Now it won't come out of 2-wheel low.  I'm looking at the transfer case (small motor on the side) and removed the 2-conductor plug from it.  Tranny fluid starts dripping from the receptacle of the motor.  Do you think a seal has failed causing the small motor to be flooded with tranny fluid, causing it to fail?  But if thats the case, how did this guy get it into 4-wheel low in the first place?  Thanks for your help.

Answer
I'm not sure on this one but if I were you Id make sure the hubs were unlocked and the 4 wheel drive swatch was put back to two wheel.  then I would back up at least ten feet.  That may free it up.  If it doesn't let me know and we will dig deeper into it.