4lo is no different than 4hi, other than the overal gear ratio. Engaging low-range doesn't change the way the power is distributed.
Without true locking differentials (or no differential at all, a "spool") your Xterra is at best only 2WD when the going gets tough, one front wheel and one rear wheel. The nature of an open (or even our lousy limited-slip) differential is to send most/all of the power to the wheel with the least traction on each axle. One side will spin while the other side does nothing. The limited-slip unit in the rear helps to keep a wheel from starting to spin, but once it does the power left to the other side is minimal and usually not enough to push or break traction, though in mud it's usually slick enough to have both rear wheels turn.
Brent
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