1999 Infiniti Infinity QX4 Transfer Case Issue (I think?)

I was driving to work the other day, when I almost got to work, I experienced some clunking/hesitation in the car, it almost felt like I had a brake problem. I drove the SUV home paying close attention to what was happening. When I would slow down and come to a stop, there was some definite 'sticking' in the drivetrain, felt again like brakes were dragging, once it got rolling, it ran like a champ. I checked out the front end, brakes, cv joints, etc were all good. I ran the self diagnostics on the transfer case and have no errors. There is a technical bulletin on the transfer case clunking, but the lights don't do what they are supposed to do (blink 3 times and stay on). What does happen is on the dash, there is a schematic of the wheels and transfer case. When in 2wd, the rear tires are lit up, in 4wd, all the tires and transfer case light are lit up. Those lights now blink continuously depending on what position I have the drive switch in. I can't find anything that suggests what would cause those lights to blink. I am not sure if I just need an oil change, or if I have a significant problem. Although I have the service manual, it does not do much for diagnosing transfer case problems except if there is a sensor issue. Any thoughts? Do you need more information?
Thanks,
Chris