Well I think I understand what is happening. The Tera four wheel drive gear is loose between the high-low clutch and the sleeve the needle bearing rides on.

The 60 ft-lb torque isn't what really presses everything on the correct depth. You still have to put a socket over the set of gears and tap it on until the 4wd gear has very little slack. Then put the nut on and torque it to the required 60 ft-lb spec.

I'd say if everything went in and shifted it should have worked. I'm guessing you had the correct gear, just not tightened up correctly.

A gun in the hand is better than a cop on the phone.

98 Passport 33's, Supercharged, Calmini Bumper, rockbars, diff drops, Teralows, 4.77's, Aussie and ARB lockers, Safari snorkel, Optima red top.