Your linkage may have come disconnected from the shifter to the transfer case. There is a TSB (Technical Service Bulletin) for this concern I will include it below.
GROUP: Transfer Case
DATE: Nov. 19, 1999
SUBJECT:Loss Of Gear Range Selection Due To A Loose Transfer Case Shifter Lever Grommet
OVERVIEW:This bulletin involves the replacement of a grommet on the transfer case lower shifter lever.
MODELS:2000 (AN) Dakota2000 (DN) Durango
NOTE :THIS BULLETIN APPLIES TO VEHICLES EQUIPPED WITH FOUR WHEEL DRIVE (NV-231 AND NV-242) AND BUILT PRIOR TO SEPTEMBER 16, 1999 (MDH 0916XX).
SYMPTOM/CONDITION:The vehicle operator may experience a condition where the transfer case can not be shifted into high or low range.
This condition may have resulted from an incorrect shift procedure, where a low range transfer case shift is attempted when the vehicle is not in motion (a static shift). The incorrect shift, into or out of low range, may force the transfer case lower shifter lever grommet to come loose from the transfer case shifter.
DIAGNOSIS:Inspect the transfer case shifter linkage. If the trunnion has come loose from the grommet in the transfer case lower shifter lever, then perform the Repair Procedure.