i am doing a 249-242 swap. His jeep is a 93 ZJ and the donor was form a 88 XJ.

I got everything broke down and put together but I can not get it out of 4WD, it seems to shift fine. When I spin the input shaft both output shaft spin wether in 2HI, 4HI PT, 4HI FT. But in NEUTRAL it is fine and 4LO is fine.

But for some reason in 2WD the front yoke is still engaged. I know on my 5.9Limited that I have a problem where I have to put it into reverse when shifting in and out of 4WD to get it to engage and disengage. And I don't if maybe this is the same way, so I tore it down again just to be sure before I put it in the jeep and I don't see how it even goes into 2WD.

BREAKDOWN of what I am reffering to.........
You have the mainshaft - on this shaft you have a freewheelin shaft (intermediate shaft) and the SUN GEAR (differential assembly), now with the rear synchro (MODE Shift Sleeve) engaged into the SUN GEAR either of the 2 positions it locks the intermediate shaft with the main shaft, which gets directly connected to the PLANETARY ASSEMBLY through the front Synchro (RANGE MODE shift Sleeve), which in turn goes directly to the rear driveshaft, but it aslo spins the DRIVE SPROCKET - which turns the front driveshaft. So where does the 2WD mode come from. I know this is kinda hard to understand unless you have tore down a 242.
Planetary gear gets connected to the intermediate shaft through the RANGE MODE Shift Sleeve, the intermediate shaft free spins on the main shaft (will not spin the mainshaft) unless the MODE Shift Sleeve is engaged in the SUN GEAR (differential assembly) but this will also turn the DRIVE sprocket which spins the front driveshaft.

anyone?

I don't know much about the inner workings of the case so i can't help you there. Try shifting in and out of 4wd while moving, after doing so tap the gas a couple of times and let it coast a little see if that engage and disengage 4wd.

Well I don't have it in the jeep yet.

But I think I just figured out what the problem was, actually I am about 99% sure of what it was. The Differential Assembly would not come off the MAINSHAFT after removing the SNAPRING-THRUST WASHER-INTERMEDIATE CLUTCH SHAFT then removing the SNAPRING and finally the DIFF Assembly should slide off the MAINSHAFT but it didn't - So I beat and beat and ifnally got it off the needle pin bearing were seized to the mainshaft and mainshaft gear. So I am going to clear the shaft surface up at work 2morow and put the bearings from the 249 Diff Assembly in it and all should be well - will keep ya up to date.

OO YEA - when I removed the SNAP RING - THRUST WASHER - INTERMEDIATE CLUTCH SHAFT - SNAP RING on the NP249 MAINSHAFT the DIFFERENTIAL ASSEMBLY just slid right off.