Spent a little while looking at the pages of the factory manual for the 97 and cogitating over it. Couple of things do come to mind.

First is the little sockets the shift lever engages in. I remember on mine noticing that they had interlocking teeth, and that one of the shafts could rotate, as well as sliding fore and aft. I never went beyond observing this interesting phenomina, but in your case, I'd be awfully inclined to pull the lever out for an inspection of this and to see if perhaps yours are interlocked.

The other thing has to do with the internals of the transfer case. It's a planetary gear reduction, and if I'm following it correctly, the sleeve slides backwards onto a spring loaded hub for low, and forward into the planetary spline piece for hi range. If the teeth on the sleeve or the planetary spline piece were bent or damaged, it wouldn't be able to move forward into the hi range, but would freely be able to move between low and neutral.

Now I think your ear could tell you something by the sounds you hear trying to engage hi when rolling or with the engine running and engaged. If you can grind things in the transfer case, then you've got teeth hitting each other. That would lead me to believe the problem is with the teeth on the sleeve and or planetary spline piece. If you can't get the teeth to hit and grind at all, you've got something blocking the motion, and that would have me suspecting something like the interlocking sockets being bound up or out of position.

You say you were in reverse when you got pulled out. Could you elaborate on the story so we can better understand things? As in running engine or not, manual transmission or auto, strange noises during the event, etc.