Isolating noise when in 4wd. 72K10 Help please

[Vanhalen1985]

Running a NP205

When I put the truck in 4 I have this clanking noise coming from under the cab. It doesn't happen when in 2wd with the hubs locked or while in 4wd with the hubs unlocked. Only when in 4wd with hubs locked. I originally thought the drive shaft knuckle was hitting the exhaust but I ruled that out. With further investigation i discovered that the the housing coming out of the TC connecting to the front drive shaft was loose. It appears that when engaged the play is creating the noise from having to much "wobble."

Would this be a bad bearing? Does this even make sense that it only does it when hubs are locked and in 4wd? Any input is GREATLY appreciated!