Check the easiest things first, the shift lever mechanism outside the transfer case is known to let go.
You can bypass it and put a vice grip directly on the case lever so pop it into H4 or H2. The shift
pattern is a straight line at the case so it is pretty easy to unbolt the base of the lever in the cab so
it can float around while you get under there.
Next step would be to see if reverse works in L4, if it doesn't then I would suspect internal damage
in the case.
At that point it would be worth pulling the case and doing a basic rebuild. They are super easy to do,
I did mine and posted it with lots of pictures on here. Mine is a Borg-Warner 1356 but they are all
pretty similar. Rebuild kits are available to do it yourself. If the case is shot, there are used ones
available quite often...
https://www.oilburners.net/threads/1998-e4od-on-the-outside-wait-a-minute.69057/page-9