I'm pretty sure that's how they are supposed to work.
I think I was wrong about the center section spinning all the time though. The front drive shaft and front diff don't spin all the time. When you push the 4wd button, it slides the collar inside the transfer case to turn the front drive shaft, and also slides the collar inside the VSV to lock up the front axle.Side note: Here is how the 4wd is actuated on this vehicle.
The top part is what connects to the outside axle cup, and therefor spins with the CV axle.
There is a ring with a groove in it. A two prong fork slides around that ring.
When you push the 4WD button, the fork is vacuum actuated and slides the ring up over the top shaft, connecting both shafts. This means that the transfer case is ALWAYS spinning the front driveshaft, front diff, and this long shaft, at all times. Only when the 4WD button is pushed are the CV axles engaged. This is also why you don't really save any gas mileage by getting manual hubs. It makes the steering a bit lighter, but you don't feel the increased peppy-ness that you do when you disconnect the front drive shaft.