I'd pull it back off and make sure there is no rust or crud in the output shaft on the transmission and the input splines on the transfer case..
All it takes is a little grit or rust to jam things up..do not be tempted to "crank it in" by tightening the bolts,that will push the output shaft into the transmission and likely ruin something,maybe crack the case too..
SweetK30 is right too,make sure the output shaft is the right length one for your application..sometimes you'll run across a TH350 "short shaft" from a car that will only work on a 4x4 if you use a spacer between the tranny & t-case--without that spacer the shaft will stick out too far..