Just replaced trans but...

I just replaced the aw4 in my 94 xj with an aw4 out of an 88 wagoneer. My jeep now hops around any tight turn and my part time light comes on while i am in 2wd. I've been reading around that it could have something to do with my transfer case. I did not remove the transfer case just swapped the tranny+transfer case in and out. Also i have a slight vibration which im guessing is related to my driveshafts. My 4wd selector is out of adjustment and i have to go under the jeep to manually switch it between 2wd and 4wd so I need some advice on how to adjust that as well (the bar that looks like it should slide on the transfer linkage doesn't seem to be moving even with the bolt out). Any help would be greatly appreciated and I've tried to look for threads pertaining to my issue but I can't really find anything. If anyone needs any pictures of anything just let me know.

I am assuming here that you replaced a part time case with another part time case, and are not trying to put a full time case in place of a former part time one. If the latter, your linkage will pretty surely not work right.

As far as adjusting, assuming you have the correct transfer case, you must first make sure that the trunnion with the bolt in it is free to slide. If it isn't, you will need to take it apart and get it freed up. They rust pretty nicely down there, but you can usually get it to start moving with a lot of lube, some pliers for persuasion, and some well chosen cuss words.

Once that trunnion is loose, what you do is get underneath, and put the transfer case all the way to 4 Low. Now up top, you put the shifter at 4 low, or just a hair forward of its limit. Tighten the trunnion bolt, and it should now be adjusted correctly. If it's too far off in one direction, 4 ow will grind or skip, and if too far off in the other, it will overshoot the 4 HI position and grind. When it's right, you should feel the shifter notch into 4 hi just as it hits the stop.

Make sure too if your Jeep is getting a bit old and rusty, to lube the bejayzus out of the linkage, so that it moves freely both back and forth and sideways in the gate. The bushing that goes through the hump can get very stiff and when that happens it may prevent the TC from landing right on the detent. If it's stiff, sit there and shift from 2 to 4 high at least 40 times. Count to 40. I don't know why, but for every stiff transfer case lever I've encountered, 40 seems to be the magic number.

When this is all done, the TC lever should be more or less level with the floor when in 2WD. It can vary a little, but if it's far from that position there's something wrong.