TD5 110 loss of drive

Evening all,
Earlier today whilst driving my 53 plate, td5, 110, i heard a clunk (wasn't driving over rough terrain) then one mile later, when half way up a 1 in 4 zigzag hill, i heard a very loud grinding noise (front about centre of the vehicle, like gears not meshing) and had a total loss of drive forward and also loss of hand brake. I slowly backed down the hill and around the bend on the foot brake and when stopped safely tried 1st and 2nd gear to no avail just grinding noise. Looked under vehicle and no obvious hanging down bits. I selected diff lock and 1st gear and had forward drive and also then in diff lock 2nd gear. Half way up hill on a loose gritty patch one of the front wheels started to spin and lose traction (leading me to believe i am only on half power, front, two wheel drive). Diff lock high ratio does work a bit but isnt as positive as diff lock low ratio. I havent tried 4th gear yet and I'm sorry to report my transfer oil level is likely to be low.
Can i ask this community what's is the likely culprit, what i should check first to start ruling out issues and if necessary where is a good place for refurbished transfer gearboxes?
Thanks a million, Neil.

Check your drive flanges first. Just pop the plastic caps off the end of the half shafts and with the wheel jacked up try turning it

The fact that it'll move in difflock suggests an axle problem rather than a gearbox or clutch problem. Yes, as above, splines can strip, and also halfshafts can break.

Put it in neutral and have a look underneath and see if either of the propshafts can be turned by hand (with the handbrake off). I'm guessing that the rear one probably can. The fact that the handbrake doesn't work implies it might be the back axle that's at fault. Chances are you don't need a whole new transfer box just yet. Well, you might do, but not for this problem. The diff mechanisms themselves are fairly long lived units and drive flanges and half shafts are relatively inexpensive.

Half shaft.

Why do you think transfer box oil is low? Been leaking?