TRANSFER CASE?
 

I have some funny things going on at low speed. I get a surge/ feel like a brake is grabbing against a warped rotor. It goes away after 40KM/HR and is not there at all at Highway speeds. Otherwise it runs great, and this surge/drag sensation is the only issue. It is not a severe feel, but just noticeable.
Jacked it up and all wheels turn free by hand with no noise or feel. Dropped the rear drive shaft and U joints are fine, tight and move freely. The front shaft from the T case is tight on the U joints, but has some slack on the slip joint. The problem is noticed in 2WD so this shouldn't be an issue. Both front axles and CV's seem fine, other than a seal leaking on the left side coming out of the front diff. Toped up Diff oil and nothing changes. Brakes don't drag, so what is left other than Transfer case? can a worn transfer case chain cause this ? and if so how do I check it? Truck has 550 000 KM on it. Any other places to consider as the cause.?

Trans slipping in lower gears?

No slipping at all in any gear or speed. Smooth and positive shifts under light or heavy acceleration.

Mystery solved. It turns out I had a lower ball joint and tie rod problem that cuped the inner right tire . Did a tire rotation, and new ball joint/tierod/alignment and replaced front Axle seals and all is fine now.