X2, sounds like the easy step , to achieve this you may have to crawl under and see if the lever on the transfer case can be moved freely by hand or with a wrench to have a better leverage, TC lever can be stuck part way... on a different TC I have to crawl under and use a wrench to finish the shifting... very annoying when the ground is wet, when it happens the first time... I now always carry a piece of cardboard in all my vehicles... useful for a flat tire swap...
Test and see, then reinstall the driveshaft and see what is happening next