Co327 code encoder circuit

Sounds like you need a transmission shop. Or check the wiring to the transmission looking for a rub or fray spot in the harness. Most likely the issue is inside of the trans.

There is an actuator located in the front differential " About 15 minutes to change " . By transfercase actuator , do you mean the Encoder Motor " transfercase shift motor ? 9 times out of 10 it is either the front differential actuator or the transfer case encoder motor

DTC C0327 Encoder Circuit Malfunction - you have a electrical circuit problem ! I suggest you take this to a ASE certified repair facility . There is a very long diagnostic process to test this !
Circuit Description
The transfer case encoder is a switch that converts a shaft position, representing a mode or range position, into electrical signals for use by the transfer case shift control module. The encoder houses 4 Hall effect sensors that are used for channels P, A, B, and C. These sensors provide a path to ground, when a magnet, (part of the Motor Encoder), passes over them.
The transfer case shift control module supplies an 8 V reference and a ground circuit for the encoder hall effect sensors to function.
The transfer case shift control module supplies current limited 5 V on all the channels, thus as these channels are pulled to ground, the module can interpret the location of the transfer case shift position.
This DTC detects an open, short to ground, or a short to voltage (12 V) in the Encoder Feed Circuit, an open in the Signal Ground Circuit, an open, short to ground, or short to voltage (12 V) in the Encoder channel circuits.

co327 is a code for your transfer case encoder motor and the U codes are communication codes. Most likely cause is the encoder motor needs replacement

I would find an independant shop that has a Tech 2 or equal scan machine....these can communicate with your TCM (Transfercase Control Module) and narrow down what the problem is.

How about to the switch , is there battery power ? Fuse #15 FWD 10amp. I/P fuse panel . BCM - body control module light's the switch indicators 2hi, 4hi,4low . Check fuse #6 10amp I/P fuse panel .
DTC 002
The transfer case encoder motor is an assembly which houses four separate channels. These channels are used to indicate to the transfer case shift control module the present gear position of the transfer case or if the transfer case is in transition between gears. The encoder motor assembly consists of an electronically conductive inner ground ring in contact with a three legged wiper arm. Each leg's length is such that it makes contact with the conductive regions of the four channels. When any leg of the wiper arm is making contact with the conductive area of any channel, the encoder provides a path to ground to the inner ground ring.
During electronic shifting, the transfer case shift control module monitors the transfer case encoder circuit for the proper operating sequence. If at any time during a shift, the encoder changes from one position to any position other than the next possible position, an error counter in the transfer case shift control module increments by four. After the counter reaches 32, the transfer case shift control module set a DTC 2, a permanent "encoder fault," and reverts to a 2HI to 4LO or a 4LO to 2HI shift pattern only. To guard against a transient, random encoder fault due to vibration, dirt, electrical noise, etc., the fault counter reduces by one each time the transfer case shift control module detects a valid encoder value. The encoder must intermittently fail 25 percent of the time for the transfer case shift control module to consider it faulty and store DTC 2.

Test Description
The numbers below refer to the step numbers on the diagnostic table.
This step measures the voltage between the transfer case encoder circuit channels P, A, B, and C to ground.
This step tests the suspect circuit(s) for an open, short to power, or short to ground.
This step tests the encoder signal ground circuit for an open or high resistance.
DTC 2 -- Encoder Fault Step
Action
Value(s)
Yes
No
Schematic Reference: Transfer Case Control Schematics
1
Important: Check the transfer case shift control module for DTCs. The transfer case shift control module is not a class 2 device. DTCs are displayed on the transfer case shift control switch. Use the following four steps to obtain DTCs.
Turn OFF the ignition for 10 seconds.
Connect PIN 13 on the data link cable (DLC) to a ground. The DLC is located in the cab under the instrument panel on the driver's side.
Turn ON the ignition, with the engine OFF.
Observe the transfer case shift control switch select buttons for flashing codes.
Did you perform the Diagnostic System Check - Transfer Case?
--
YES - Go to Step 2
NO - Go to Diagnostic System Check
2
Disconnect the connector at the encoder motor.
Turn ON the ignition, with the engine OFF.
Measure the voltage between the transfer case encoder circuit channels P, A, B, and C to ground.
Does the voltage measure near the specified value?
4.8-5.1 V
YES - Go to Step 4
NO --Go to Step 3
3
Test the suspect circuit for an open, short to power, or short to ground. Refer to General Electrical Diagnosis and Wiring Repairs in Wiring Systems.
Did you find and correct the condition?
--
YES - Go to Step 8
NO - Go to Step 7
4
Turn the ignition switch OFF.
Test the encoder signal ground circuit for an open or high resistance. Refer to General Electrical Diagnosis and Wiring Repairs in Wiring Systems.
Did you find and correct the condition?
--
YES - Go to Step 8
NO - Go to Step 5
5
With a DMM at the transfer case module connector probe the encoder sign ground pin and ensure a good ground path through the module.
Did the DMM indicate a good ground path?
--
YES - Go to Step 6
NO - Go to Step 7
6
Replace the transfer case encoder motor. Refer to Motor/Encoder Replacement .
YES - Did you complete the replacement?
--
NO - Go to Step 8
--
7
Replace the transfer case shift control module. Refer to Transfer Case Shift Control Module Replacement .
YES - Did you complete the replacement?
--
NO - Go to Step 8
--
8
Clear all DTCs from memory. Refer to Diagnostic Trouble Code (DTC) Clearing .
Operate the vehicle while pressing each of the buttons on the transfer case shift control switch.
Does the DTC reset?
--
YES - Go to Step 2
NO - System OK

you need to scan transfer case module for codes, i have replaced many encoder motor sensors donot replace entire encoder motor

MOST COMMON IS ENCODER MOTOR
COULD HAVE SWITCH OR WIRE ISSUE
OR INTERNAL T/CASE

1. Inspect Transfer Case Control Module (TCCM) and encoder/motor wiring, terminal contact, grounds.

2. Install updated TCCM calibration.

3. Inspect for TCCM water intrusion.
4. Replace transfer case encoder/motor. 1. Check voltage on pin A, Light Blue wire at the engage switch.

2. The voltage should remain near 1.0v with no buttons pushed, compare to the value on the scanner when the problem happens.

3. Back close to the switch by hand and check for a glitch.

4. Wiggle tug test harnesses at the switch and TCCM.

5. Check terminal to pin grip. could be your transfercase control module locater under drivers side of dash. or the encoder motor

That is the code for the transfer case control module. It is really expensive to replace, maybe $500 or more. Unfortunately, everytime I have had the code pop up, you will have to have the trans case drained, flushed, and the control module will have to be changed. I am truly sorry for the bad news, but I really hope all works out:(