Thanks everyone for the great info. I was kind of leaning towards solenoid c based on what I've learned so far. Thanks for affirming my opinion. I will have it scanned at my friends shop after this weekend to know for sure.
One thing I forgot to mention though, is that it doesn't seem to down shift while going downhill and I tap the breaks.
I lifted the car today and there are no dents on the transmission. I did, however find that there is a torn CV boot on the right side. I'll fix that next. And some of the dents under there are VERY fresh (like within a few weeks). I will interrogate her little sister to whom she lent the car about a week ago.
I test drove the car today with the fuse in FWD. Seems fine. This, however is not a real fix and I will address it as soon as possible. I agree with you Grossgary about tires being more important than 4wd (I wont put my Jeep in 4wd unless there is at least half a foot of snow, just too boring lol). My girlfriend works at a ski resort though and I expect her to need it very soon.
Thanks again for the help and keep me posted of any more thoughts you may have.