Two problems related to transfer case have been reported for the 2005 Chevrolet Silverado. The most recently reported issues are listed below.
The 4 wheel drive buttons fail to work every so often. I was coming home from ann arbor, mi. One night and my indicator light said I was in neutral for some reason. I played with it for a bit and no luck. My friend was with me and he owns a repair facility in south lyon, mi. He knew what was wrong! the encoder motor for the transfer case is bad. It is an electric item and fails. The encoder motor is what shifts in to 4 hi, 4 low, auto 4 wheel and 2 hi. This happened again toward the end of Feb 2010 when my truck would not shift at all, 2 hi was my only option. Another friend of mine has a 2004 Silverado and her encoder motor went bad on the freeway. Her problem was that her truck threw her into 4 low while she was at 70 mph. Omg is that safe???? gm needs to do something before people start to crash or worse getting hurt and dyeing as a result.
Failure of the 4 x 4 control module and automatic transmission shift motor. While driving the transfer case shifted into neutral, pressing the 2hi button caused the transfer case to lock up. The truck was shut off while driving on the freeway and was dead steered to the shoulder. Complete replacement of both module and motor replaced $1972. 00 dollars, truck only had 58,237 mi.