Help! Tranny or Tras Case or Linkage????

Hep me! Hep me! Driving our 86 Blazer down the road, began to go up a hill and heard this awful grinding. Pressed the gas pedal and the engine revved but didn't go anywhere. Pulled to the side of the road and parked. When we tried t oput itin gear, more grinding. Blazer started to roll - no parking gear! Had to pull the parking brake. Now, The tranny is a rebuilt out of an 88 Blazer. Still has a 6 month warranty left. But was told that my problem was not the tranny, but either in the transfer case or linkage. Was told that poss the linkage due to the difference between the 86 tranny and the 88 tranny and that adjusting the linkage would fix my problem. Apparently when the 88 tranny was put in the blazer, th elinkage was hooked up "as it sat" without any adjusting. The rebuilt tranny has less than 300 miles on it and it sat for a little while. Any input is welcome!

Sounds like either a failed transfer case, failed rear differential, or maybe a failed u-joint. Put it up on a hoist, or jackstands, and check the u-joints, rear end, or the transfer case. The grinding is becasue the transmission is freewheeling, the output side of the transmission is turning, when its suppose to be stopped. You could damage gears by trying to change gears when its freewheeling.

Okay! Got a roll back on the way to have it checked out. If it is the transfer case - would this damage the transmission? The place that rebuilt the tranny doesn't do transfer cases and I know it wouldn't be covered by the warranty.