All good now guys, copious penetrating oil, and a hefty dink, and got a spanner onto the key and moved it.

It was the transfer case hi/lo selector shaft as suspected and it was seized up solid (all the way forward in lo).

Now soaking over night and will reassemble tomorrow with a wee bit of lithium grease to keep it sweet.

Going to do transfer case oil change while I am in the area. It looks to me like there is some moisture in the linkage housing so will get a good bit of EP90 in the housing too before assembling.

Thanks for the tips!