The clutch solinoid is ruled out, so now im leaning toward a worn out clutch pack or a speed sensor ( would a fualty sensor throw a code)
Yes, a faulty VSS should trigger a code (32 or 33).
For the most part, the solenoid could be ruled out because it's normal failure mode is "off", which will apply full pressure to the clutch piston; i.e. full clutch and full time rear drive. But the solenoid is only one part of the control -- there's also a transfer valve which could (although rare) be seized in its closed position. (See attached)
To really know, the best test would be to monitor the clutch hydraulic pressure. There's a port for this on the side of the extension case. This will quickly confirm if hydraulic pressure is being applied to engage the clutch, and if it is, then it's likely the clutch pack is gone.
There have been instances where the clutch drive plate housing has separated from the reduction gear, and I recall one case where the output shaft had broken. In either case the pressure measurements would have indicated the correct levels. Nevertheless, the outcome is the same -- the extension case has to come down, at which time whatever the problem is will be revealed and can be readily repaired. The idea, however, is to be reasonably sure it's something in the case, and not elsewhere, before going that route.