flat towing it and the transmission went into gear, for about 20miles, it was smoking. now when you try to start it it sounds like it turns over real easy, but wont start. sounds like it is free spinning when you crank it, any suggestions what i did to it.

Well Jim, first of all - sorry to hear about the incident. But this is something that many folks have sworn time and again never happens. I hear so much about folks towing 50-60-70K miles without incident by just putting the transfer case in neutral and the trans in 2nd. Ever since I had a violent towing incident of my own I have been telling folks about driveshaft disconnects and removing driveshafts for travel only to hear that I shouldn't worry so much. I don't feel alone anymore. Now on to your situation...
You are going to have to pull apart your motor, your trans and maybe your transfer case to check for damage. The motor (stock) is non-interference, so if it just broke the crank key then it is probably rebuildable. But you need to check everything for burnt/shredded bearings. The trans and transfer case will also need a going over to check for burnt/shredded bearings.