1990 Jimmy 4x4 Problems

Howdy, I just bought a 1990 S15 Jimmy 4x4 and all is working fine minus one thing.. I popped it into 4x4 one day as I was going down a dirt road, and when I got to the end, I tried to put it back in 2wd, but it wouldn't go back. The shifter seems to be in the 2wd position (considering I can't put it anyfurther forward) but its still in 4x4, then when I shift down one, it goes into neutral, and then one further goes into 4 low, which appears to be the last setting in the shifter. Am I missing something? Like some sort of button (cause I hate to admit it, but for the longest time, I thought the cruise control button was the wiper fluid button and thought my wiper motor had burned out... hey most of the labels are erased thanks to years of use!) I have been able to get it from 4-hi to 2wd before, but that could have been dumb luck.. Any ideas?

Also, I have an oil leak on some sort of adapter thing thats around the drive axle.. looks like this:

=======|-------------\
| O \
| |
| O /
=======|___________/

The equal signs are two hoses, one coming from the oil filter and another coming from god knows where, and the "o's" are bolts. I've already replaced the gasket on "it", but that actually made it worse (I'm assuming I broke it more while replacing lol. What is this thing??

Thanks
Ben

Well that picture didn't seem to work, I did a bit of searching and I think it has something to do with the oil cooling line or something..

Is your oil filter behind the drivers side headlight? Is so then I think I know what you are talking about but mine also leaks but its number 10000000 on my list of thing to fix.

Im working on the front differential right now. It is a supreme bitch to get out. Im redoing the whole front end while everything is apart.