Take the sensor out of the transfer case(4x4) again, it has a gear on the end of it, thats called the Driven Gear, it can be changed to correct speedometer if you get larger or smaller tires.
Inside the transfer case is the Drive gear, its on the output shaft, it is a worm gear.
Push on the Drive gear GENTLY, to make sure it is LOCKED to the output shaft, these can break or get worn down, not too hard to change them, just remove rear seal on output shaft.
Also check Driven gear, make sure it is LOCKED to sensor.
That's the mechanical part of the speedometer system

The two wires from the VSS(vehicle speed sensor) on the transfer case run to a Ground and then the instrument cluster
Pink/orange wire is the Ground
Grey/black stripe wire is the one that goes to instrument cluster, it has a splice in it to Cruise, computer and GEM module.

Below is wiring diagram for 1996 instrument cluster so you can check the specific grey/black wire, center of drawing, splice is the dot but can't tell you where that is????

VSS generates its own voltage, AC voltage, .5-2.0v, you can use a drill to spin driven gear shaft and should see speedometer show speed or see AC voltage on grey wire and Ground with meter set to AC Volts