Yes, it has to be locked to get it in or out of the axle housing.

Once its in, you can lock or unlock it either using a 12v source directly to the motor (we did this for several trips on my buddies rig using jumper cables and some small alligator clip leads before we built the switch and wire harness setup), or by unbolting the motor and doing it manually.

'97 4Runner, '06 F350, '86 4Runner, '05 WR450
http://home.4x4wire.com/erik