Sounds to me like a spring has gone which returns the gear selector to the mid position.sorry mate but if that is the case then it's a gearbox strip.
trans has to come out. sounds like a broken output shaft between the 3rd and 4th gear synchro. 4th gear is the very last gear on the output shaft before it goes out to the driveshaft. 3rd gear is right in front of it. can't be the countershaft becaus...
There is a shift fork in the transfer case, that's actuated by solenoid. Sounds likethe fork is worn allowing the gear to not fully engage. Once torque is removed from the gear, it will not contact drive gear in case. Eventually, something will snap,...