The 2004 Denali has the wrong transfer case. It has a BW transfer case.
But.....the BW transfer case seriously blows. It's basically acting like an open diff and sends power to whatever wheel that wants to spin. When you start making enough power to spin in AWD, it really really starts to suck. Most guys will swap at the Silverado SS transfer case, the NVG149 or NP149 (same case, New Process bought New Venture Gear). I'd highly recommend swapping to the NVG149 case and running my input gear to mate it to the 4L80E. The NVG149 will split roughly 38% of the power to the front and 62% of the power to the rear, it acts like a posi differential and actually splits the power front to back and makes for a much better driving experience with big power.