My 95 Grand Cherokee stalls when placed into drive.

I have a 1995 Jeep Grand Cherokee, with 189000 miles. There are no check engine lights, new battery, idles fine. I purchased the vehicle two weeks ago, it drove home fine. While sitting still I shifted the transfer case selector into 4 part time then neutral and then 4 low and back to 2wd. The next day, I started it up and everything seemed fine. I shifted into drive and it stalled similar to a manual transmission. No puttering, the engine just died. I later spent some time moving the transfer case shifter around, which was hard to do. It would go from 2wd to 4 part time easy, but feel like it was blocked from going into neutral no matter how hard I pulled. With the engine running and shifting both selectors around I could move the transfer case selector into neutral. The engine was still running, and I was able to move the vehicle into 1 and 2 without it stalling. I put it into reverse, moved a few feet, put it into drive and it did not stall. I drove the vehicle around the block and parked it. The next day, stalling again as soon as its placed into drive. Half the time it stalls, I hear a high pitched beep. Also, when placed into reverse, there will be a clunk, and the vehicle will raise up an inch. I have researched stalling and they mention sensors, but this feels like its related to the transmission/transfer case. Thank you for your help.