Thanks for all the information on this.
I have the exact same problem on a 95 Brighton, 5MT, and have it in today for the 168,000km maintenance and ask them about it.
I just got off the phone with the tech who explained that the VCD is worn out, and will cost 960$+4hrs (1300$ Canadian) to replace!!!
So I said, "what if we just leave it?"
He said it would eventually wear to the point that I essentially had 2WD - though I think he means that the centre differential would essentially be an open differential, but that there would be no adverse affect on other parts of the drive train.
He tried to describe the VCD as this "3-in wide disk with a big gear on it", and over time a groove is worn in the disk - ?? anyone got a picture :-)
As long as I don't mind driving and AWD car with an open centre differential, I don't have to do anything.
I'm not doing anything :-)
cheers!