Our transfer cases don't have a "2Hi" option, they only have the "HIGH" and "4L" options. I suspect you now have either front wheel drive or rear wheel drive when in the "HIGH" range as you have indeed broken the final drive in the transfer case now sending all the drive force to either the front or rear driveshaft. I would probably not drive it in this condition as you may completely grenade the transfer case somewhere out on the highway. Seeing as how you already have a spare, I'd put it in and then crack open the old transfer to see just where things went boom...
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