Is it occuring only in 4low or also in 4high? Or could it be that since in 4low your vehicles speed is slower so the smell is able to "stay" with the vehicle - so in 4high you dont smell it as much?
It won't be your clutch because thats working just the same as in high or low ranges, 2WD or 4WD. The only thing is if you are using 40" tires with 3.90:1 diff gearing and are slipping your clutch everywhere you go in low range because your first gear idles at over 6 mph
I was thinking about your driveline. Are the splines or the yokes over-greased and once you use 4WD it throws grease all over the place including your exhaust pipe and then it burns off......
