These are pretty easy to diagnose. 1st, with all wheels on the ground, unlock the hubs, select four wheel drive and slide under the truck and make sure the front drive line will not spin. If you can turn it, the problem is in the transfer case.
Next, lock in the front hubs and select 2x4. You should be able to turn the front drive line by hand less than 1/2 turn, unless it has a locker. If the hubs are locked and you can turn that front drive shaft, then look at the axles where they pass through the steering knuckle and see which one is turning. The one that is turning probably has a blown locking hub.
The Dana 60 is extremely strong and very seldom will fail on the stock tires, you just about cannot over load a Dana 60 on the stock size tires. It is almost always the splines in the sliding part of the hub that break. Glen