Hello,
I am trying tonget my '78 Santana 109" with a 200tdi-lt77-lt230 up and moving after years. I thought I had it, but the monster has other plans.
Here's the issue in as much details as I can muster:
I shift into gear and I have no drive. I just installed a new clutch master and slave and they seem to be working.
The front drive shift spins, but the rear does not.
There is an intermittent knocking noise from the transfer case. It seems to come from right at or inside the axle brake drum. The drum itself twitches with the noise.
It will occasionally "catch" and cause the vehicle to lurch (forward or reverse)

I don't know anything about this stuff so feel free to talk to me like an idiot. My gut feels like whatever connection from the transfer case to the rear drive shift that is in the axle brake drum is broken.. . But that's just an uneducated guess. I could really use a hand.

OK so first lesson on how the Lt 230 works. It is a permanent four wheel drive system where drive is sent to all four wheels at all times. To allow for different wheel speeds you have the normal differential's in the axles and to allow different wheel speeds front to rear there is another differential inside the lt 230.
This center diff has a lock so when using vehicle off road drive is sent 50/50 to both axles.
An issue is many folk do not understand that this is not an axle locker, its job is the same as when you put a more usual 2x4 system into 4 wheel drive.
An issue is that when center diff is in its normal open road going position should any of the four wheels not be on the ground all drive will go the easy way to the wheel in the air, hence the lock for off road work.
Because your front shaft is spinning this says there is an issue with the front axle.
To test put the transfer box into lock and main box into gear and gently see if it drives. Come back when you have done this.

tottot, Thank you for the reply. I am dying over here and the helps means a lot.

The vehicle is on the ground in my garage.
The only way the vehicle will move is with the front hubs locked.
I have tried putting the Tcase is every position i can.
With the front unlocked the front driveshaft spins (as it should) but the rear doesnt (when the rear is lifted)
There is a fast banging noise from the Tcase when this happens.

To cover my bases here: to put it in lock the lever should be pulled toward the seat and to the left?

UPDATE: I think my Tcase selector linkage may have been put in wrong/weird. After messing with it a lot, I put it as far back and to the left as it would go. This to me should be High-locked. The rear driveshaft is finally spinning, but when I lift the rear end, it is only one tire. There is an occasional loud clang, but i think that may be looseness in the driveshaft. It has an inch or so of slack.

Again, I understand what I am saying and doing outs me very clearly as a dunce about this. I do engines. Heck, I wrote the tuning a 200tdi post on this forum, but I am all self-taught (my father is blind or he would have) and I have never had an opportunity to work in this area.

A normal Lt230 fitted vehicle would never have free wheel hubs fitted.
The system being full time 4 wheel drive so there would be no point. The only way it would drive with free wheel hubs not locked is with the center lock engaged, otherwise power always goes the easy way, in this case the free front drive.
The same goes for an axle, with both wheels off the ground drive will go to the one that is the easy to spin. Put the wheel that turns back on the ground and see if the other spins, if it does axle is good.
If one is unlucky to bust a half shaft in either axle engaging the lock will get one home
You are correct with position of H/L lock on the stick. [ if you have standard 230/see later info]
The Permanent Lt 230 4 drive system has caused much confusion over the years with owners and this linked with how a differential works even more so.
Now I have to add the fact there was a 4x2 4x4 version made of the Lt 230 made in the early days [80's] I have never seen one, they are rare.

OK I think I had my head wrapped around this. So I have proved my Tcase CAN send power to the rear axle, it just isn't unless the diff is locked, meaning that (since both front wheels are on the ground) something is disconnected in the front axle. The vehicle moves with the front hubs locked because it acts as a solid axle. So i need to work on rebuilding the front axle/diff. Are there any good resource you know off hand for that?