It kind of depends on the condition of the transfer case whether lifting the tires off the ground will tell you anything. I have one quadratrac that has no limited slip left that you can turn one driveshaft without the other turning.
I also had one installed for a while that wouldn't lock and I didn't have a frone driveshaft on either. The limited slip was so tight that as long as I didn't floor the gas, I could drive it around without the front output spinning and the rear one staying still.
The transmission in those is just a plain TH400 with an AMC bellhousing pattern. The rear pattern is the standard six bolt TH400. Here is a little more on the transmission: http://www.off-road.com/jeep/tech/trans/th400.html
The transmission output turns a sprocket in the quadratrac transfer case which turns a chain which turns another sprocket. The offset sprocket has a differential in it similar to an axle limited slip differential. Picture the sprocket having the same role as the ring gear and the output shafts driven the same as the axle shafts.
Some quadratracs came without a low range too. The CJ-7 you looked at most likely had the low range with a little lever mounted to the transmission hump in front of the driver's seat. The cherokee might not have the low range but if it did, the lever would be barely sticking out from under the seat on the side of the transmission hump.
Both should have a vacuum switch located in the glove box with a green normal drive mode and a red emergency drive mode. All the emergency drive mode does is slide a collar (via vacuum lines to a shifter on the transfer case) to lock the rear output shaft to the sprocket to lock the differential. This is similar to the way the ox locker works only it uses a cable instead of vacuum.
You can use the jeeps in one of four modes: high range unlocked, high range locked, low range unlocked, and low range locked. The low range is 2.57:1. Here is a little more information on the transfer case: http://www.off-road.com/jeep/tech/xfer/qtrac.html
A lot of people don't like the quadratrac and it is a little misunderstood but in my opinion, it is not that bad a transfer case. I bought my CJ-7 with 90k miles on it and now have 188k miles on it. I have replaced the chain twice in that time but it is a simple job. The lower rear output is a plus for the driveline angle when lifting. The full-time feels a little more stable on the road compared to the times I removed the front driveshaft and locked the transfer case for rear wheel drive. Since I installed lockrights front and rear, I also installed front locking hubs so I can lock the transfer case and unlock the wheel hubs. I have tried driving with the hubs locked and the transfer case unlocked but the front locker just has way too much torque steer.
Last winter on the snow covered roads it did fine in full-time mode even with both the lockers. I think this was because the driveshafts could still turn independently.
Maybe I have been lucky with mine holding up to the abuse I give it but I have no complaints with using it.