i determined the ratio control motor was the culprit and i rebuilt it. here is how:
the transfer case was stuck in high range, but the motor encoder (a rheostat basically) was reading out low for low range selection and zone 2 for high range selection (using tables from RAVE on the borg warner transfer box). this manifested itself as the infamous "select neutral" message from the message center when in high range on the h-gate. the transmission also seemed to shift later than it should and the shift mode button never worked.
i removed the ratio motor from the transfer case, marked the encoder position and removed the encoder. while the encoder was soaking in alcohol, i verified operation of the motor without the gear with two D batteries (3V). it moved fine without the gear installed, so i cleaned out the remains of the broken stop bushing, greased everything back up, and ran the motor again in both directions (alternating polarity). at this point the motor was looking pretty good, so i focused on the encoder. i continued the alcohol soak while rotating the input shaft for another 5 minutes or so. then i put the encoder back on in the position i had marked earlier and sealed with thin film of hylomar hpf. i managed to loose the o-ring at 2am (started @ 12am), but even if i had it i've found hylomar hpf works well for o-rings going into bores (like the heater core o-rings) so i still would use this on the o-ring.
next i re-assembled the motor/encoder assembly and verified operation of the motor and corresponding switch states using the batteries again (see RAVE for the table for switch states). everything looked good, so then i re-installed the ratio motor onto the transfer case, making sure the orientation of the isosceles triangle input shaft made sense with the current motor position (cw is high range, ccw is low range). ALSO MAKE SURE THE H-GATE RANGE SELECTION MATCHES BEFORE CONNECTING THE MOTOR. someone had messed with this before because a bolt was missing and the motor orientation was ~ 90 degrees out. to be perfectly clear - if the ratio motor is currently in low range, make sure the input shaft on the transfer case matches (rotate the input shaft ccw) as well as the h-gate. and of course the motor only mounts in one position.
aftewards i cleaned all of the connections and plugged everything back in. i tried to verify the switch states at the transfer box ecu and discovered the connector view in RAVE is incorrect. i think it is actually for the bosch trans ecu. however, the pinout is right so i verified the states based on the pinouts from 19 (ground), 7, 17, 31, and 32. then i started up and everything was working again! the shift mode button as well as high and low range. furthermore the transmission was shifting at lower rpms now in high range. from what i could determine from RAVE, if the transfer case state cannot be determined it uses the last valid range shift profile. in my case it was low range. so i had the low range shift profile for high range. the transfer case never went to low range even though the motor thought it was there because the input shaft and ratio motor selections were incompatible when someone had reinstalled it previously (the 90 degree offset). the motor actually swung straight up once i had removed all of the mounting bolts upon removal.
i hope this helps anyone with this kind of issue. i wanted to contribute something to the board since you guys have helped me out in the past. now it's time to sell...