I live down in Georgia where we don't have issues like that. I do recall reading around on here about some trucks of that vintage having alcohol kits installed upstream of the air compressor inlet to help alleviate that sort of problem. I'd try to locate one of those or attempt to install an air dryer. There is a member on here who sells one designed as a replacement for an M939 series truck for under $200. I'm not endorsing that you purchase anything from anyone. If you go that route, you'd have to fabricate a mounting bracket and some fitting to plumb the unit into the air system. You'd also need to add some wiring to power the heater and you'd have to tee off a line from the governor to the compressor unloader to signal the expello valve on the dryer to vent the moisture. If you're hearing the correct sounds when shifting from forward to reverse, a loud "Pffft" but the transfer is not moving, you likely have a frozen sprag selector due to moisture freezing on the actuator. It's not hard to check. Bring it into a heated shop and let it sit for a day or so, then get under there and remove it. You can remove the housing from the transfer case, clean everything and lube with air tool oil. See if the piston attached to the transfer case is able to move easily, check the two O Rings! After everything is cleaned and lubed, re-install and cross your fingers.
