On gen II's the CV's are always turning unless you fit aftermarket manual hubs. So if you had a bad CV this may cause a clicking sound. Driving around on pavement in 4hi is Fine it just like what most would call AWD (center diff unlocked). (just dont drive around pavement in High or low Lock) Anyways its perfectly normal for the flashing lights it takes a while to disengage. If you use the 4hi(active track) a lot maybe you wore out the CV. I would advise to drive in 2wd whenever on the hardball and I fitted manual hubs to reduce wear on the CV's and boots. Also driving in 4 hi will killyour gas milage but its great for wet or slippery conditions.