F-6 two speed rear won't downshift

[budmanroch]

My vacuum actuated 2 speed won't downshift when the truck is running. I checked the valve and it has 15 inches of vacuum when in HIGH range, and 0 in low range. I watched the actuator on the rearend and it moves in and out. The truck will be in low range after it sits for a night. Then I shift to HIGH and its fine. But when I try to go back to low I get a loud grinding noise from the driveshaft. Whatever is supposed to mesh in the rear - isn't as far as I can tell. Any ideas on what to try next? I'm a novice on differentials. Never had one apart.