One problem related to transfer case has been reported for the 1997 Ford F-250. The most recently reported issues are listed below.
On December 4, 2004, I took my truck on about a 600 mile trip. During the trip I tried the cruise control, which worked about 5 months earlier & found it to be nonfunctional. The next day, I found myself in a position that required engaging the four-wheel drive, however it would not engage. I parked the truck that evening & had not touched it in the following month and a half. On December 10, 2004 my wife canceled the insurance since my plan was to leave it parked until spring or I could afford to get it fixed. Then on January 26, 2005 @ 05:00 am, my wife woke me up saying that my truck had just exploded. I went outside & saw the fire in the engine compartment. At that time the main concentration of the fire was on the driver?s side. I notified Ford, to which their reply was sorry for your inconvenience but there are no recalls on your vehicle & it is also out of warranty.