The red lever is pivoted on a bracket at the bottom, after passing through a sort of loop on the front of the selector shaft, all outside the transfer case. The most likely cause of the problem is something interfering with this movement outside the box. Possibilities include sticks or stones interfering with movement, or the bottom pivot pin loose or missing, or the loop loose on the selector shaft (held by a nut and spring washer). An anti-rattle spring on the ball that moves in the loop may be missing, but this should not have the effect you describe.
The other likely problem is rust on the selector shaft is causing it to stick. Removing the driver's floor panel should enable you to see what is happening. (You can see from underneath, but a lot easier with the floor out.)
Less likely is an internal problem. There are a variety of possibilities, including lack of oil, or something loose or broken in the mechanism in the front extension housing, or the selector fork loose on the selector shaft.
The bottom plate of the transfer case and the front extension can both be removed without removing the transfer case. If no external problems can be found I would remove the bottom plate to check what is happening. But before this I would make sure I had the manual and understood how it was meant to work.
John
John
JDNSW
1986 110 County 3.9 diesel
1970 2a 109 2.25 petrol
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