The Pathfinder 4WD is not towable without a drive shaft disconnect, available from Home | Remco Towing
. Then you tow 4-down. The dolly makes it even worse, since the smart driveline assumes one set of wheels is slipping and locks up the drive (as you found out). The alternative to the drive shaft disconnect is a trailer rather than a dolly.
Or trade the Pathfinder.
2004 American Tradition; 2014 Buick LaCRosse
Homebase in the Ocala Nat'l Forest near Ocala, FL