Understand the hub operation. When the transfer case is in 4H, the front
drive shaft will rotate about 90 degrees before you feel and hear the hubs
begin to engage. After engagement, another 90 degrees or so will have them
fully locked.

However when the transfer case is in 4H or 4L, the front shaft movement is
restricted to about 5 or 10 degrees before the gears in the transfer case
stop any further movement.

When I was searching for the neutral position, I was trying to feel the
disengagement of the transfer case (constrained to about 5 degrees
movement) to a place where the transfer case had let go of the front axel
and movement was now restricted by the hubs. Never found a place on the
shift shaft between 4H and 4L where the transfer case let go of the front
shaft. Had the motor off and was moving the shift shaft by hand. The
detents and casing marks for 2H, 4H and 4L are really clear. No ambiguity
there.

Since more than a few have suggested that this transfer case really does
have a neutral, I had concluded that the transfer case must have synchro
cones or something roughly equivalent, spring loaded that require the
drive shafts and gear mechanism to be completely unloaded before a shift
can be completely affected. Such a mechanism would make sense because
this transfer case allows shifting in and out of 4WD high while in
motion.

Looked like my best shot of finding this elusive neutral position is to
lift the car so both drive shafts were completely unloaded. If it's there
(no reason to doubt, several have told me quite clearly that it is), I'll
find it.

The encoder wheel is cute - easy enough to understand. Also easy enough
to cut a new one with an identifiable contact logic combination telling a
computer (my design, not Ford) where to find neutral. Other ways probably
easier is to just use a conventional encoder wheel and have the computer
count ticks between 4H and 4L. As soon as I find the neutral place,
figuring out how to have the motor put it there should be pretty easy.

Thanks for your help.

G