Try a search for shifter sheet at Ack's FAQ (link in signature, below). You'll find several links to pages (with pictures!) describing how to install a new shifter sheet in the transfer case - a somewhat difficult task if you are totally unfamiliar with mechanical stuff. Heck, it can be difficult even if you are semi-smart!
The total parts cost of the fix is less than 20 bucks (including shipping).
You'll also find some informative links with a search for transfer case.
Hope this helps!