Another user asked this question... I did some research and this is what I found...

I couldn't quit thinking about the towing thing so I did a little reading...
not all of the cjs can be towed without drive shaft removal or modification.

older cj's up to 1979 with the Dana 18 or 20 can be towed with the t-case in neutral.

76-79 cj with the quadra-trac CAN NOT be towed without removal of the drive shaft.

1980-86 cj's with the dana 300 t-case CAN NOT be towed..... UNLESS It has been clocked to a flat position so the oil will contact the output gear and fling oil to lube it's self. (clocked or turned up for more ground clearance)

from 87-2006 three different cases can be found in the wranglers all of which can be towed by putting the t-case in neutral.

Hopefully I diddn't send you in the wrong direction the other day, I got to thinking about the quadra-trac and honestly didn't know for sure. I usually don't speak up about anything unless I know about it or go searching out of curiosity because someone else brought it up.

you can check it out for yourself in JP magazines January and May 2007 issues.
look for the transfercase bible in the intro.  

Perfect! Great post for people that flat tow. For the T-cases that you can flat tow it's best to put the transmission in First (manuals) or Park (automatics).  

what is it that prevents the quadra-trac from being flat towed? I have never had one apart,  

According to the owners manual Jeeps with the Quadra-trac transfer case can be flat towed if they are equipped with the low range reduction unit.  The low range reduction unit was an option on larger Cherokee and Wagoneers but came standard on the 1976-1979 CJs.  The reduction unit is equipped with a neutral position which disconnects the transfer case from the automatic transmission.  

JeepCJ.2