Hmmm, I would recommend doing a service on the transfer case. It's super easy and there are a lot of write ups out there. If it's a manual tranny, might as well do that too while you are under there. Hour job and your TC and tranny will be grateful. I doubt the chain is in need of anything, but you never know. TC uses just plain old ATF4 fluid. I run red line in mine, but that is just because I had it leftover from a previous auto. Not saying I wouldn't service an auto trans, that's a different process though.
Now the TC shifter is a different story. I would inspect the linkage thoroughly, sounds like its no good and possibly a broken bushing. I have a Novak shifter cable conversion on my bench for mine. Google Novak and that should solve the issue. Or, pick up parts to fix the factory linkage at rockauto until you can spring for a Novak.
I seriously doubt there is anything wrong with your TC. Just a little love and you should be good to go.
