First of all, do you have any other hydraulic issues with it, like poor lift capacity or slow operation of hydraulics??
The front axle is engaged by a spring and disconnected by hydraulic pressure, so it needs hydraulic pressure (and electrical power) to stay in 2wd...
The dragging you feel makes me wonder if you have low hydraulic pressure or perhaps a park(hand) brake issue. The clutch in these tractors is a hydraulically engaged wet clutch, and it"s housed to the rear of the transmission housing, not next to the engine. Also do you notice if the clutch is sharp to engage (especially in the higher ranges)?
To check the front axle hydraulic system, locate the mfd valve body, iirc it"s above and to the rear of the main hydraulic pump, up by the cab frame(it"s a squarish block, with an electrical connector out of the top - the solenoid- and a pipe coming out of the rearward face and then into the transmission housing). Take the solenoid out and check it operates correctly (apply power and you should be able to hear it click) and that the o-rings are in good shape.
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