Truck sat for about a year and now when in park rear wheels both spin freely. When in gear pinion and ring gear do not seem to engage but wheels spin freely without making driveshaft spin. Is this in the rearend or transmission i don't know.

when you say not engaging , what are the symptoms
what were the symptoms that made you change the starter and fly wheel in the first place
problems include incorrect pinion gear pitch for the ring gear,
pinion clutch not adjusted to engage ring gear properly
should there be a spacer adapter between the starter mounting face and the block housing
what brand of starter motor is in use as different starters use different applications for the pinion gear

The Selectable Four Wheel Drive (S4WD) Front Axle consist of the following components:
• Differential Carrier Housing
• Differential Case Assembly
• Inner Axle Shaft
• Intermediate Shaft Bearing Assembly (located on the right side of the oil pan)
• Electric Motor Actuator
The front axle on Selectable Four Wheel Drive (S4WD) model vehicles uses a disconnect feature mounted on the right side of the oil pan in order to engage and disengage the front axle. When the driver engages the 4WD system, the Transfer Case Control Module sends a signal to the electric motor actuator to energize and extend the plunger inside. The extended plunger moves the clutch fork and clutch fork sleeve across from the clutch fork outer gear that is splined to the right side wheel drive shaft to the clutch fork inner gear that is splined to the inner axle shaft. The locking of the two gears allows the axle to operate in the same manner as a semi-floating rear axle. A propeller shaft connects the transfer case to the front axle. The differential carrier assembly uses a conventional ring and pinion gear set to transmit the driving force of the engine to the wheels. The open differential allows the wheels to turn at different rates of speed while the axle continues to transmit the driving force. This prevents tire scuffing when going around corners and premature wear on internal axle parts. The ring and pinion set and the differential are contained within the carrier. The axle identification number is located on top of the differential carrier assembly or on a label on the bottom of the right half of differential carrier assembly. The wheel drive shafts are completely flexible assemblies consisting of inner and outer constant velocity CV joints protected by thermoplastic boots and connected by a wheel drive shaft.

How To Install Repair Replace 4x4 Front Axle Actuator Chevy Trailblazer...

Someone would need to jack up the rear of the truck and check to see if the wheels will spin freely in neutral.
Its possible the parking brake cable is rusty and stuck, or something has happened to the rear brakes.

Check your linkeage bushing (plastic). Dorman makes a replacement, these tend to break. In the mean time, you can Jerry rig it. I've seen people use zip ties to get by.

The truck is in park, this means the parking pawl is engaged to keep the wheels
from moving and it locks the transmission/ driveshaft. Try putting it in neutral instead.

Starter motor spins, but does not engage

1. Check the starter motor for a seized or binding pinion gear.
2. Remove the flywheel inspection plate and check for a damaged ring gear.

it can do the pinion may be worn, take off the motor and see! do it now beause it might be the ring gear, you see if you ahve a bad pinion then it will dammage the fing gear! if the ring gear is dammaged... you can replace starter,, It may seem fine, but the dammaged ring will grind up the new starter's pinnion, once the ring gear is dammaged then it is gear box out! so look now to avoid more lenghty and expensive repairs!! Have a nice DAy........Bruce.

shift into 4wd and move truck a couple of feet.
if light is still off, park truck block the wheels set the park brake jack right front wheel and try to hand spin the wheel if wheel doesn't turn 4x4 is functioning properly but there is a wiring problem use an ohmmeter to check the 4x4 switch wiring fuse and bulb
if wheel turns freely the front axle or transfer case is not engaged
attempt to hand spin the front driveshft if the driveshaft will spin the transfer case is not engaged check the transfer case shift linkage, problem is in linkage or transfer case internals
if the driveshaft will not spin the transfer case is engaged properly
with trnsmission in neutral or park start engine measure vacuum on the two vac lines at front axle shift motor . one line should have approx 20" vacuum. other line should have none
if no vacuum measured look for vac leak or bad vac switch
if both lines have vac look for a bad vac swithc or ruptured cad actuator diaphragm
if one line has 20" +- VAC
move transfer case lever to 2wd measure vac again lines should have swapped vac signals
if no vac switch bad or 4wd shift likage needs adjusting
if yes vac motor bad or stuck or shift fork stuck
remove vac shift motor from the axle attach vac lines to shift motor engage disengage 4wd
does shift motor plunger move at least 1/2 inch
no shift motor bad
yes check axle shift fork and vac motor for binging

it sounds like you have a broken axle . in park jack up one rear wheel at a time and try to turn it . the broken one will turn the other shouldnt . take off the cover and vissually inspect i have seen the spider gears go as well .

put truck in reverse hit brakes constantly and then go for drive in first gear. .... problem was brakes got all locked up ...... to not drive a vehicle is the worst thing u can do to it . hope i helped ELI