One problem related to transfer case has been reported for the 2004 Toyota Sequoia. The most recently reported issues are listed below. Please also check out the statistics and reliability analysis of the 2004 Toyota Sequoia based on all problems reported for the 2004 Sequoia.
When I was going up a hill / dirt road in 4wheel high, at the midway point up, the engine lost power, I had the accelerator to the floor and the brake light came on and would not go off. It felt like brakes were being applied automatically. I put the gearshift in park and neutral put gear in 4 low and 4 high with and without center differential locked and unlocked with no results, vehicle would not accelerate uphill. I then had to reverse down to a level area, which was very dangerous as there was no room to turn around, after reaching a more level area, I turn off engine for about 20 minutes and when I restarted I was able to go downhill and left early from my trip as I dont want to be in this kind of dangerous situation again. Also my air conditioner is putting out strong pungent smells. I tried to clear the air by putting lever in fresh air mode as suggested by your tech, but intermittently the smell.