So last night when I was engaging the 4WD I noticed a constant rattling noise from the rear passenger side of the car. It goes away after I disengage the 4WD. There is also a loud thud whenever I disengage. Both these noises are new, so is it a sign of something going wrong? Please give me some good news.

Things to check:

wheel bearing
center driveshaft bearing

Ujoints

Whatever ya do don't drive in 4wd on dry pavement just so ya know I've read that a million times lol !.. and i would follow Dave T suggestions... I've always had the thud when disengaging.. sometimes more than others..

Oh, also all 4 tires should be the same type, brand, wear.