Nope wouldn't cause loss of just half the gears and as for the transfer case ouch - lol

 

Dang! Blew a hole right in the side of it!

98 would have had the narrow 1" chain. Do your research and see if the input splines line up, and see if you can grab an older case with the 1.25" chain. Might help it to not happen again

 

+1 Everything I’ve read here says you most likely blew tranny clutches 3 and 4. Sorry.