I replaced the t-case vacuum switch more as a precautionary measure. I am confident fluid did not get sucked into the vacuum hoses.
One other diagnostic note. The issue only seems to appear when I try to engage 4x4 at higher speeds. The light on the 4x4 switch turns on just fine(no blinking). Everything appears fine, except that I know the 4x4 is not engaged because I'm fishtailing. When I step on it, I hear the grinding noise, but only when I step on it. The grinding is directly related to the engine RPM's. The faster the RPM, the faster the grinding.