97 jimmy transmission problem

my brother has a 97 jimmy 4wd with the 4.3 and he is having problems with the tranny shifting. when you take off from a stop, it will accelerate and go into 2nd gear, then when it gets ready to shift into 3rd the engine revs and it feels like it goes into neutral. i noticed it does this around 30 mph. but if i drop the shifter into 2nd gear the tranny kicks back in and stays in second. i also tried manually shifting it and it still does it. but when i put the shifter in 2nd gear and accelerate from a stop, it starts out in 2nd instead of 1st. what kind of part would need to be replaced? also, the transmission fluid seems to be leaking into the transfer case because i checked it using the dipstick and there was nothing. but a couple of months ago i took off the top drain plug from the transfer case and the extra fluid drained out. i know this is a seal but cant remember what its called. is it the transfer case output shaft seal?

If there was nothing on the stick when u checked it. You more then likely blew out the trans.

Does reverse engage correctly?

Is the trans now refilled with the correct oil?

Are there any transmission fault codes?