Manual Transmission seems to be stuck in low range. Transfer case in 2wd high range, however when transmission is shifted to 5th gear still only going 25 mph at 4000pm. Clutch seems to be engaging and disengaging fine. Is this a transmission problem or a problem with the transfer case?

Have it check for DTC'S - diagnostic trouble codes ?
GEM Diagnostic Trouble Code (DTC) Index
GEM Diagnostic Trouble Code (DTC) Index DTC Description Source Action C1728 Transfer Case Unable to Transition Between 2H and 4H GEM CARRY OUT the electronic shift function test. REFER to Function Test - Electronic Shift in this section. C1729 Transfer Case Unable to Transition Between 4H and 4L GEM CARRY OUT the electronic shift function test. REFER to Function Test - Electronic Shift in this section. P0500 Vehicle Speed Sensor (VSS) Malfunction GEM GO to Pinpoint Test F . P1804 Transmission 4-Wheel Drive High Indicator Circuit Failure GEM GO to Pinpoint Test H . P1808 Transmission 4-Wheel Drive Low Indicator Circuit Failure GEM GO to Pinpoint Test I . P1812 Transmission 4-Wheel Drive Mode Select Circuit Failure GEM GO to Pinpoint Test E . P1815 Transmission 4-Wheel Drive Mode Select Short Circuit to Ground GEM GO to Pinpoint Test E . P1819 Transmission Park/Neutral Position Switch Short Circuit to Ground GEM GO to Pinpoint Test F . P1820 Transmission Transfer Case Clockwise Shift Relay Coil Circuit Failure GEM GO to Pinpoint Test E . P1822 Transmission Transfer Case Clockwise Shift Relay Coil Short to Battery GEM GO to Pinpoint Test E . P1828 Transfer Case Counterclockwise Shift Relay Coil Circuit Failure GEM GO to Pinpoint Test E . P1830 Transmission Transfer Case Counterclockwise Shift Relay Coil Short Circuit to Battery GEM GO to Pinpoint Test E . P1832 Transmission Transfer Case Differential Lockup Solenoid Circuit Failure GEM GO to Pinpoint Test G . P1834 Transmission Transfer Case Differential Lockup Solenoid Short Circuit to Battery GEM GO to Pinpoint Test G . P1865 Transmission Transfer Case Contact Plate Power Short to Ground GEM GO to Pinpoint Test E . P1866 Transmission Transfer Case System Concern - Servicing Required GEM CARRY OUT the electronic shift function test. REFER to Function Test - Electronic Shift in this section. P1867 Transmission Transfer Case Contact Plate General Circuit Failure GEM GO to Pinpoint Test E . P1876 Transmission Transfer Case 2-Wheel Drive Solenoid Circuit Failure GEM GO to Pinpoint Test G . P1877 Transmission Transfer Case 2-Wheel Drive Solenoid Circuit Short to Battery GEM GO to Pinpoint Test G . - For All Other DTCs GEM GO to Section 419-10 .
Your best bet , take it to a qualified repair shop that has the diagnostic tool to trouble shoot .
Principles of Operation
Transfer Case - Electronic Shift
The four-wheel drive, electronic shift-on-the-fly feature electrically shifts the vehicle transfer case between 2WD, 4X4 HIGH, and 4X4 LOW. The system mode is selected by the operator through the mode select switch (MSS) on the instrument panel. The operator is informed which mode the system is in by two instrument cluster indicators, one for 4X4 HIGH which is 4X4, and one for 4X4 LOW which is LOW RANGE (in 4X4 LOW both the lamps are on). Shifts into 4X4 HIGH can be made at any speed. When shifting into 4X4 HIGH with the vehicle stationary, tooth blockage may occur, preventing shift completion. When the vehicle is driven above 8 km/h (5mph) the shift will complete. When shifting in or out of 4X4 LOW, the generic electronic module (GEM) requires that the vehicle speed be less than 5 km/h (3 mph), the brake pedal be applied, and the transmission in NEUTRAL (automatic transmission) or the clutch pedal be depressed (manual transmission). (The digital transmission range [TR] sensor informs the GEM when the automatic transmission is in the NEUTRAL range position.)
The gearmotor encoder assembly is mounted externally on the transfer case. It drives a rotary cam which moves the mode fork and the range fork within the transfer case between the 4X4 HIGH, 4X4 LOW, and 2WD range positions.
The GEM uses two relays to control the gearmotor encoder assembly shift between 4X4 HIGH, 4X4 LOW, and 2WD modes. The GEM controls the pulse vacuum hublock (PVH) solenoid which supplies engagement and disengagement vacuum to control the hublocks.
The GEM accomplishes shifts by interpreting inputs from:

• mode select switch (MSS)
• vehicle speed signal (transmitted from the ABS system)
• gearmotor encoder plate position
• brake pedal switch
• digital transmission range (TR) sensor (automatic transmission)
• clutch pedal position (CPP) switch (manual transmission)
• ignition switch

Based on these inputs, the GEM controls the shifts into 2WD, 4X4 HIGH, or 4X4 LOW with the following outputs:

• low to high relay (clockwise)
• high to low relay (counterclockwise)
• pulse vacuum hublock (PVH) solenoid
• gearmotor encoder assembly

The electronic shift-on-the-fly (ESOF) system has a feature which allows the driver to override the vacuum operated hublocks. When the front hublocks are manually turned to the LOCK position, the hublocks are locked at all times, overriding the vacuum operated system. If the front hublocks are manually turned to the AUTO position, the hublocks can only be locked by turning the MSS to 4X4 HIGH or 4X4 LOW position.

On the transfer case
Transfer Case - Electronic Shift
The four-wheel drive electronic shift-on-the-fly feature electrically shifts the vehicle transfer case between 2WD, 4WD HIGH, and 4WD LOW. The system mode is selected by the operator through the mode select switch (MSS) on the instrument panel. The operator is informed which mode the system is in by two instrument cluster indicators: one for 4WD HIGH which appears as 4WD, and one for 4WD LOW, which appears as 4WD LOW. Shifts into 4WD HIGH can be made at any speed. When shifting into 4WD HIGH with the vehicle stationary, tooth blockage may occur preventing shift completion. When the vehicle is driven above 8 km/h (5 mph) the shift will complete. When shifting in or out of 4WD LOW, the four-wheel drive (4WD) control module requires that the vehicle speed be less than 5 km/h (3 mph), the brake pedal be applied, and the transmission be in NEUTRAL (automatic transmission) or the clutch pedal be depressed (manual transmission).
The gearmotor encoder assembly is mounted externally on the transfer case. It drives a rotary cam which moves the mode fork and range fork within the transfer case between the 4WD HIGH, 4WD LOW, and 2WD range positions.
The four-wheel drive (4WD) control module controls the gearmotor encoder assembly that shifts between 4WD HIGH, 4WD LOW, and 2WD modes.

did you turn the locks on the wheels, or check the fuses

Manual shift or Four-Wheel Drive Systems - Electronic Shift I'm assuming you have electronic shift because you refer to relay clicking behind the instrument panel . Principles of Operation Transfer Case - Electronic Shift
The four-wheel drive, electronic shift-on-the-fly feature electrically shifts the vehicle transfer case between 2WD, 4X4 HIGH, and 4X4 LOW. The system mode is selected by the operator through the mode select switch (MSS) on the instrument panel. The operator is informed which mode the system is in by two instrument cluster indicators, one for 4X4 HIGH which is 4X4, and one for 4X4 LOW which is LOW RANGE (in 4X4 LOW both the lamps are on). Shifts into 4X4 HIGH can be made at any speed. When shifting into 4X4 HIGH with the vehicle stationary, tooth blockage may occur, preventing shift completion. When the vehicle is driven above 8 km/h (5mph) the shift will complete. When shifting in or out of 4X4 LOW, the generic electronic module (GEM) requires that the vehicle speed be less than 5 km/h (3 mph), the brake pedal be applied, and the transmission in NEUTRAL (automatic transmission) or the clutch pedal be depressed (manual transmission). (The digital transmission range [TR] sensor informs the GEM when the automatic transmission is in the NEUTRAL range position.)
The gearmotor encoder assembly is mounted externally on the transfer case. It drives a rotary cam which moves the mode fork and the range fork within the transfer case between the 4X4 HIGH, 4X4 LOW, and 2WD range positions.
The GEM uses two relays to control the gearmotor encoder assembly shift between 4X4 HIGH, 4X4 LOW, and 2WD modes. The GEM controls the pulse vacuum hublock (PVH) solenoid which supplies engagement and disengagement vacuum to control the hublocks.
The GEM accomplishes shifts by interpreting inputs from:

• mode select switch (MSS)
• vehicle speed signal (transmitted from the ABS system)
• gearmotor encoder plate position
• brake pedal switch
• digital transmission range (TR) sensor (automatic transmission)
• clutch pedal position (CPP) switch (manual transmission)
• ignition switch

Based on these inputs, the GEM controls the shifts into 2WD, 4X4 HIGH, or 4X4 LOW with the following outputs:

• low to high relay (clockwise)
• high to low relay (counterclockwise)
• pulse vacuum hublock (PVH) solenoid
• gearmotor encoder assembly

The electronic shift-on-the-fly (ESOF) system has a feature which allows the driver to override the vacuum operated hublocks. When the front hublocks are manually turned to the LOCK position, the hublocks are locked at all times, overriding the vacuum operated system. If the front hublocks are manually turned to the AUTO position, the hublocks can only be locked by turning the MSS to 4X4 HIGH or 4X4 LOW position.
Do you know what DTC'S - diagnostic trouble code's are ?
GEM Diagnostic Trouble Code (DTC) Index
GEM Diagnostic Trouble Code (DTC) Index DTC Description Source Action C1728 Transfer Case Unable to Transition Between 2H and 4H GEM CARRY OUT the electronic shift function test. REFER to Function Test - Electronic Shift in this section. C1729 Transfer Case Unable to Transition Between 4H and 4L GEM CARRY OUT the electronic shift function test. REFER to Function Test - Electronic Shift in this section. P0500 Vehicle Speed Sensor (VSS) Malfunction GEM GO to Pinpoint Test F . P1804 Transmission 4-Wheel Drive High Indicator Circuit Failure GEM GO to Pinpoint Test H . P1808 Transmission 4-Wheel Drive Low Indicator Circuit Failure GEM GO to Pinpoint Test I . P1812 Transmission 4-Wheel Drive Mode Select Circuit Failure GEM GO to Pinpoint Test E . P1815 Transmission 4-Wheel Drive Mode Select Short Circuit to Ground GEM GO to Pinpoint Test E . P1819 Transmission Park/Neutral Position Switch Short Circuit to Ground GEM GO to Pinpoint Test F . P1820 Transmission Transfer Case Clockwise Shift Relay Coil Circuit Failure GEM GO to Pinpoint Test E . P1822 Transmission Transfer Case Clockwise Shift Relay Coil Short to Battery GEM GO to Pinpoint Test E . P1828 Transfer Case Counterclockwise Shift Relay Coil Circuit Failure GEM GO to Pinpoint Test E . P1830 Transmission Transfer Case Counterclockwise Shift Relay Coil Short Circuit to Battery GEM GO to Pinpoint Test E . P1832 Transmission Transfer Case Differential Lockup Solenoid Circuit Failure GEM GO to Pinpoint Test G . P1834 Transmission Transfer Case Differential Lockup Solenoid Short Circuit to Battery GEM GO to Pinpoint Test G . P1865 Transmission Transfer Case Contact Plate Power Short to Ground GEM GO to Pinpoint Test E . P1866 Transmission Transfer Case System Concern - Servicing Required GEM CARRY OUT the electronic shift function test. REFER to Function Test - Electronic Shift in this section. P1867 Transmission Transfer Case Contact Plate General Circuit Failure GEM GO to Pinpoint Test E . P1876 Transmission Transfer Case 2-Wheel Drive Solenoid Circuit Failure GEM GO to Pinpoint Test G . P1877 Transmission Transfer Case 2-Wheel Drive Solenoid Circuit Short to Battery GEM GO to Pinpoint Test G .
Your best bet , take it to a qualified repair shop .

the transmission and the transfer case are two different parts. the transfer case takes the shaft power and splits it to the front and back. depending on the cable or electric motor that shifts the transfer case gears. you could have a problem with just an electric motor or cable and or the transfer case it self could be the problem. try putting the truck into neutral before trying the high and low to make it easier to work and hope it goes. the second thing is are the rear wheels working in 2wd or in 4wd or is just the front wheels working in 4wd.

1. • 1 Start your Dodge truck's engine.
     
   • 2 Turn the electronic transfer case from "2WD" to "4WD Lock" to engage the high range 4WD, if the dodge truck is equipped with an electronic transfer case; otherwise, shift the transfer case lever from "2H" to "4H." The electronic transfer case is located on the instrument panel and is marked with "2WD," "4WD Lock" and 4WD Low." The lever-equipped transfer case is located to the right of your leg and is marked with "2H," "4H" and "4L."
     
   • 3 Shift the transmission into "Neutral" while the vehicle is either stopped or rolling at 2 to 3 mph to begin engaging in the low range 4WD. Turn the electronic transfer case to "4WD Low," if the Dodge truck is equipped with an electronic transfer case; otherwise, shift the transfer case lever from "2H" or "4H" to "4L."
     
   Tips & Warnings
   • Indicator lights will come on and alert you that your vehicle is in either the high or low range of 4WD.
     
   • Do not engage in the low range of 4WD drive if the transmission is in gear; you must shift to "Neutral" first.
     
   • Many Dodge trucks allow you to shift from 2-wheel drive to the high range of 4WD at up to 55 mph--consult your truck's manual to ensure that this is possible. Do not exceed 55 mph while engaged in the high range of 4WD. Do not exceed 25 mph while engaged in the low range of 4WD.
     
   • Do not engage in 4WD unless you are on slipper or rocky roads.
     

Electronic Shift On the Fly (ESOF) Operation
The ESOF system is an electronic shift 4x4 system that allows the operator to choose between two different 4x4 modes as well as 2-wheel drive. The operator can switch between 2WD and 4WD HIGH mode at speed. To engage or disengage LOW Range, the vehicle speed must be less than 5 kph, the brake depressed, and the transmission must be in NEUTRAL.

The transfer case is equipped with an electromagnetic clutch which is located inside the case. This clutch is used to spin up the front drive-line when shifting from 2WD to 4x4 High mode at speed. When the control switch on the instrument panel is turned, the generic electronic module (GEM) recognizes that a shift has been requested and activates the electromagnetic clutch and the relays which power the transfer case shift motor. When the shift motor reaches the desired position as determined by the contact plate position inputs to the GEM, power to the shift relays and motors will be removed. When the transfer case front and rear output shafts are synchronized, the spring loaded lockup collar mechanically engages the main-shaft hub to the drive sprocket. Finally, the front axle collar is engaged and the electromagnetic clutch is deactivated.

Shift Between 2WD and 4x4 HIGH:
Shifts between 2WD and 4x4 HIGH can be made at speed. Listed below are the inputs and outputs needed by the GEM to execute a change between any of these modes.

Feature Inputs:
*4WD Mode Switch (Various resistances).
*Contact Plate Position Inputs A, B, C, D (grounded when closed, open circuit when open).

Feature Outputs:
*4x4 Shift Motor Relay Outputs
*Transfer Case Clutch Relay (grounded when relay is on, open circuit when relay is off).
*4x2/4x4 Vacuum Solenoid (grounded when activated, open circuit when deactivated).
*Cluster Indicators (ground when activated, open circuit when deactivated).

Shifting Into/Out of 4WD LOW:
When shifting into or out of 4WD LOW, the GEM requires that the vehicle speed be less than 5 kph, the brake is applied, and the transmission is in NEUTRAL.

Feature Inputs:
*4WD Mode Switch (Various resistances).
*Contact Plate Position Inputs A, B, C, D (grounded when closed, open circuit when open).
*VSS Sensor (Sinusoid Signal: 0.7V-20V, 2.2 Hz/mph).
Brake Input (battery voltage when brake is depress, open circuit when not activated).
*Transmission Range Sensor (grounded when transmission is in NEUTRAL, open circuit otherwise).
8Start/Clutch Depressed Input

Feature Outputs:
*4x4 Shift Motor Relay Outputs
*4x2/4x4 Vacuum Solenoid (grounded when activated, open circuit when deactivated).
*Cluster Indicators (grounded when activated, open circuit when deactivated).

4WD Mode Switch
A rotary switch allows the vehicle operator to choose between 2WD, 4WD HIGH, and 4WD LOW modes of 4x4 operation.

GEM Module
The Generic Electronic Module (GEM) controls the operation of the 4x4 system

Vehicle Speed Sensor
The vehicle speed sensor (VSS), mounted in the rear of the transfer case, informs the GEM of the vehicle speed.

Transfer Case Shift Motor Sense Plates

The shift motor sense plate, an integral part of the electric shift motor, informs the GEM to the positions of the transfer case

Transmission Range Sensor
Located on the left side of the transmission, this sensor informs the GEM when the transmission is in the NEUTRAL position.

Electric Shift Motor
The electric shift motor, mounted externally at the rear of the transfer case, drives a rotary cam which moves the mode fork and range fork within the transfer case to select between the 2WD, 4WD HIGH, and 4WD LOW positions.

4x4/4x2 Vacuum Solenoids
These two solenoids are attached to the upper RH side of the engine compartment dash, and alternately route vacuum to the vacuum motor which engages/disengages the center axle disconnect collar in the front axle assembly.

4x4 Shift Motor Relay
A module containing two relays which under the control of the GEM, shift the transfer case shift motor between the 2WD, 4WD HIGH, and 4WD LOW modes.

Transfer Case Clutch Relay
An electromechanical relay is used to activate the transfer case clutch within the transfer case.

Good luck and hope this helps,but start with the simple and check the fuses and wire harness. Both white/light blue stripe wires should have 12V in run. The GEM will ground the left side (closest to engine) solenoid to disengage the front axle. It will ground the the right side solenoid (closest to fender) to engage the front axle. If the GEM doesn't see Neutral it will not let the truck come out of 4Lo. If the GEM had water leaking on it it may well be the root of the problem. The shift motor only has power when the GEM sends it a signal to move the shift lever. Once the shift is completed the motor shuts off. There are 2 wires that control the shift motor. A yellow and an orange. The GEM alternates between 12v and Ground to these wires to control which way the motor turns. The GEM uses the transfer case shift relay module to control the power to the motor. There are contact plates inside the shift motor assembly that indicate the position that the shift lever is in. This is what the GEM used to know what the T-case is doing. Any one of these components can fail.

make sure your 4WD switch is working.and fuse is okay.because your 4WD is control by 4 electric shift motors in which drive a rotary cam which moves the mode fork and range fork inside the transfer case to select between 2WD HIGH A4WD - 4WD HIGH AND 4WD LOW RANGE.a shift motor sensing plate on the shift motor monitors the range in which the transfer case is operating a transmission range sensor monitors the gear position of the transmission.which must be in neutral to shift into low.a pair of solenoids one for 2WD one for 4WD.mounted on the upper right firewall route vacuum to the vacuum motor which engages and disengages the center axle disconnect collar in the front axle assembly.a 4 x 4 shift motor relay module contains two GEM controlled relays which shift the transfer case shift motor between 2WD and 4WD modes.a solid state clutch relay activates the A4WDclutch inside the transfer case.

Either your linkage is not properly adjusted or the shift fork is a bit worn inside the transfer case. I have a bit of wear on my own and shift into low range while rolling with no load, between 5&20mph and it works fine except that I need to anticipate needing it before hand. One important rule...If it grinds, don't force it into gear. That will cause damage.
Also, if you just got it, change the oil in there...you have no idea when it was last serviced.

Just to clarify, the "transmission" is not stuck in 4-Lo. It is the "transfer case" that is attached to the transmission that actually engages the 4-Hi and 4-Lo modes. To properly shift your vehicle into 4-Lo, you know that you have to shift the transmission into neutral and slow down to less than 5 mph. Once your vehicle slows down to this range, your can switch your transfer case into 4-Lo mode. Due to the inner workings of the transfer case, the actual shift into 4-Lo may take a few seconds to complete. This is normal and does not signify that there is an issue. All transfer cases that have 4-Lo mode will act this way regardless of the make or model. To make a long story short, to shift out of 4-Lo you must follow the same steps that you took to shift into 4-Lo, just in reverse order. Switch the transfer case to 4-Lo mode if it isn't already there. Slow down to less than 5 mph (your vehicle must be moving, though). Then, shift your car into 4-Hi or 2WD. Give your vehicle several seconds to complete the shift. The transfer case indicator light will flash until it is complete. When it does complete the shift into the new gear mode, you will most likely hear a "clunk" (the range sleeve inside the transfer case disengages from its mating spline) from under your car. Again, any transfer case with 4-Lo (regardless of make or model) will exhibit this same noise. This should help you get out of 4-Lo. It is good practice to shift your car into and out of 4-Lo at least a few times each year to keep all of the splines free of corrosion and build-up. Based on the age of your vehicle, your transfer case may also need a complete flush and some new transmission fluid. Hope this helps.