I personally cannot go into great detail on this subject. I can say that there are very few reports of broken front diffs similar to that in the photo from Bebe.
I believe, traction control is active until it is manually turned off. However, stability control is deactivated automatically when the transfer case is shifted into 4-wheel low lock. These are two different systems, even if controlled basically by the same computer.
However, if no one turned the TC off manually, then the TC was operational, and that solves that question.
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Black Sheep Hummer Squadron
(ME TOO)
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