Well like the other post said, don't use 4wd on pavement unless there is a lack of traction which allows your front and rear to spin at different speeds. 2nd gens and most 3rd don't have a center diff, just a transfer case, so the front and rear are locked together whenever your in 4WD. When you are turning into a parking spot your rear outside and front inside tire need to spin at different speeds, in 4WD they are locked together and can't do that so you get binding. On snow, dirt or other limited traction scenarios they can brake free and spin easily so no binding. As for neutral, I assume you mean 4wd neutral the 4x4 light will stay on as you are still in 4wd just neutral. Seems you have a 5 speed put it into 4 neutral and leave it in 1st and let go of the clutch slowly, if it tries to grab and move then your neutral is not working, you should be able to let off the clutch in gear and 4 neutral and idle.