Due to the nature of Toyota's modern Part-Time 4WD system, the front driveshaft will spin regardless if the transfercase is in 2WD, 4Hi, or 4Lo. The reason behind this is that Toyota's Part-Time 4WD system uses the transfercase to select gears & gear ratios, but the front axle itself actually engages the connection between the front differential and transfercase via a system called ADD (Automatic Disconnecting Differential.) The ADD system is a combination of an Actuator, synchronizer ring, shift fork, and splined axle shaft. It works by engaging the scynchronizer ring much like a manual transmission to connect the right front driveshaft with the differential ring gear. When the ADD is deactivated, the passenger side front axle shaft is spinning freely and does not engage the ring & pinion and thus the front axle freewheels. When ADD is engaged, the synchronizer ring is engaged, the axle shaft is locked to the ring and pinion and thus it is driven by the front driveshaft like a regular open differential (this is not a "locker" in the sense it splits axle power 50/50, but rather just engages power to the axle.)

I have the training manual .PDFs on my computer at home and at work for Toyota's 4WD systems, but T4R.org doesn't let me put anything above 15.5mb so I need to find a way to combine the smaller chapters into one file for you guys.

Back to your problem though, if nothing is actually trying to engage (you should hear the actuator trying to move the sync ring in the front axle) then more than likely the ADD actuator has failed and/or one of the sensors/switches that lets the 4WD module know where parts are and when to shift have failed. If you could have someone pull the codes from the 4WD Module and let use know what it is, it will help use decide what direction you should go in terms of diagnostics and repair.