Basically you put a switch on the wire that runs the A4WD off of the transfer case. This allows you to have a 2wd function as well as the A4WD. The 97-98 models had the 2H option but then for some silly reason they did away with it from 99-02. What we do with my mom's truck is just pull the fuse under the hood for the transfer case. This deactivates the magnetic clutch that runs the A4WD and essentially gives you 2WD at that point. Only pain is that if you do need 4x4, you have to put that fuse back in.
Google brown wire mod, there is plenty out there if you are going that route.