If linkage is in fact moving the Xfer case levers into full position, then check motor mounts. Loose motor mounts can cause this. All this must be checked carefully because removing and rebuilding a T221 is difficult and expensive. If it is a divorced case it is probably a Rockwell/Timken T221. Of course it has a tag or you can post a pic if you want to know. Even a screwed up shift boot could do this. Since it is not your truck, your info to us is second hand. Very hard for us to advise with that type of info.
As HB indicates, be sure it's not the tranny slipping out, be sure all mounts for motor, tranny and xfer case are not broken or loose. The reason we are emphasizing this is the xfer cases get VERY little use/mileage (usually) and last a long time if properly lubed.
The three speed is not considered rare. It was standard. The 4 speed was an option.
An inspection would include taking off all three drive shafts and turning transfer case by hand to detect the noise. If you don't hear anything, it still could be bad bearings under load. If it is actually making noise, do not run it anymore. Extra damage can be done. I assumed the oil level was checked. Is your friend mechanically inclined? With automotive? Is this truck new to him?
