One problem related to transfer case has been reported for the 1997 Chevrolet K1500. The most recently reported issues are listed below.
After coming to a stop after driving on freeway with transmission hot vehicle will slam hard into 2nd gear upon acceleration from initial stop. Dealers are recommending transmission replacements and or expensive repairs. Numerous web sites show owners complaining about this as early as 40k miles. I have contacted gm but fail to acknowledge any problem even though they have a service bulletin out that states quote: "the condition may be caused by a slip-stick condition between the propeller shaft slip yoke and transfer case output shaft" corporate bulletin # 99-04-21-001 and I believe this to be the case with my and many others vehicles.