1995 Dodge Truck four wheel drive

If the front driveshaft is working (engaged) then it sounds like an issue with the front diff.There could be a worn/broken engagement collar like you said that is keeping it from locking in. Be absolutely sure the transfer case is engaging before going after the front diff.
Put in 2wd- apply 15 hg of vacuum to port "L" on transfer case switch (See pic), vacuum should be present at "M". Then connect vacuum gauge to port "N" and put in 4wd, apply vacuum to port "L", you should have vacuum at port "N", i fswitch fails any test replace it