There is a conversion section for these kinda things. I am in the process of a similar project but a bit on the pricier end of things.
Those years Cummins came with a NV4500 5 speed manual which are pretty good but have an issue with losing 5th gear. If that is addressed, it is a pretty bulletproof tranny in a small package as long as you use the right lube.
I THINK they came with NP205 t-cases which are also very good. If you are lucky, you can find a truck to get the engine, tranny, and t-case all in one from. Piecing things together will yield some issues as you will also need the adapter from the tranny to the t-case and I think a 2WD tranny might not even take the adapter.
I do not think that you will need any lift at all. Some body lift will help you fit the engine in easier but I have mine in w/o any body lift. You should not need any suspension lift either.
Front axle... solid is not necessary but it is the easiest and best solution. You could use a TTB setup but a Dana 60 is ideal and should come from the same year range as your truck to bolt up.
Overall it adds up to some pricey parts but it can end up being quite a cool rig.
Some prices for you to compare to... Southern California area
I got my D60 locally for 750 complete rotor to rotor and springs/shocks too
'97 Engine I paid around 3k for but it locally; had only ~125k miles on it and less than 5k with the mods and the mods put it at around 500 horse and it had an exhaust brake and some other goodies
I got a newly rebuilt NV4500 with a bellhousing and shift tower for 1500 shipped to my door through ebay... comes with adaptor to T-case
For t-case, I opted to go with an Atlas 4 speed... close to 3k for that
You will also need motor mounts and lots of little things.
It all gets expensive but I hope to have a nice rig that will be more powerful, easier to work on, more efficient and reliable than any new truck out there for ~15k total.