Firstly, it is not a diff lock - it engages front drive. Movement should be around 20mm. If you clean the muck off, you will see that it operates a lever pivoted in the middle, that lifts a pin out of the front of the transfer case extension housing. This releases a spring loaded selector to engage front wheel drive. When Low range is engaged, the spring loaded selector shaft is brought forward and the pin should drop into a hole to reset, while a separate action engages the front drive or keeps it engaged, and then disengages it when high range is again selected. All this needs the three selector shafts to slide freely, and particularly in conditions conducive to rust, they often seize, especially if the dust cover on the front is missing or has allowed water in.
Remove this, if present, and make liberal use of penetrating oil, and work the mechanism until the selectors move freely. (There is a slight possibility that one of the internal springs is broken, but I have never encountered it - always just sticking of the shafts)
The loose high/low lever probably means the anti-rattle spring on the ball is missing, and the bottom pivot and possibly the ball and the hole it fits are worn. The bracket the ball goes in may be loose on the selector shaft, and it is possible, although unlikely, that the selector is loose on the selector shaft.
Get hold of a manual or parts book and you should be able to see how it works. To understand the transfer case mechanism you do not need a Series 1 book - the mechanism was unchanged from when the free wheel to the front drive was dropped in 1952 to the end of Series 3 production (and even optional on early 110s and 90s, although I doubt any of these made there way here.)
John
John
JDNSW
1986 110 County 3.9 diesel
1970 2a 109 2.25 petrol
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