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Yea, no locking hubs, everything turns all the time, it's just engaged at the transfer case. Most likely problem is either a bad half shaft (front diff to hub) or one of the CV Joints on the front driveshaft. (transfer case to front diff). Neither job is specific to the CRD, although some of the parts might be?
Check the CV joint on the transfer case side of the front driveshaft (where the front driveshaft connects to the transfer case) if you want, as that is a very common failure. The boot disintegrates, the grease comes out, and the CV joint is quickly damaged. Mine made no noise in 2wd and I hadn't driven much in 4wd when I found it, but it has been noted as causing noises particularly in 4wd. Shouldn't cost much to replace and any decent mechanic should be able to handle it. Don't replace the driveshaft unless you can source one for a CRD, I think they are longer than the 3.7 (watch a non-CRD savvy shop doesn't order one for a 3.7...). I couldn't find one I was sure would fit when I did mine, so I just did the CV joint. Depending on your skills, time, tools, and space to work available you can probably do it yourself in an hour or 2.
_________________ 2005 Jeep Liberty Sport CRD 4x4 278k
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