Most likely it's the range fork inside the tcase. The range fork has nylon guides that allow the range gear to ride in, if they get worn out the gear eats into the aluminum fork, and allows it to pop out of gear. More than likely, the oil pump spun and you have no lubrication.
Parts wise, if the fork is okay, you need the $6 inserts and probably a new bracket for the oil pump. If the fork is toast, I found one for $20 a few weeks ago. Tool wise, you need a good pair of snap ring pliers and lock ring pliers. You can do this yourself, provided you pay attention to how it comes apart. It's easily a day job taking your time.
These guys treated me right....
http://www.makcotransmissionparts.com/BW1356-Sliders.html