A few theories:
1. There is a big bolt (>1") that the arm hinges on. That could have broken or backed out. If that happens, the lever will try to fall through the floor, but you won't be able to pull the lever into the cab, because that big chunk of cast iron is still attached under the floor.
2. If the two small bolts that attach the hand lever to the iron casting backed out (or broke), then you would be able to remove the lever into the cab. On the photo below, they are the only brand new bolts. If only one of the little bolts backed out, then it would feel very sloppy, but the bottom end would still be rooted. I ended up welding mine to the cast iron after these bolts kept coming loose on me.
3. There is also a side pivot arm (controls entry into low range) that may have come loose from the main bracket. This would have similar symptoms to #1.
The photo below is likely what you have (shown for "AOD" but my 1990 E4OD/1356 setup is the same, except for the connecting link that goes to the transfer case arm, which looks like it might be shorter in this photo):
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Just be glad you don't have the Pot-metal setup circa 1992-up.