Transfer case

I got a 96 Cherokee with a NP 231 J, and when I'd let off the gas in 2hi it would make a scraping noise. When I took my front driveshaft off it stayed there, also it seems I had a bunch of play in there also when I'd put it in 4hi and reach under it and turn the front yoke, it'd go about a half inch before it'd bite and want to spin with the rear. I've done took my transfer case off and now that I'm in there Im wondering if there should be any play on the planetary gear set, one of the gears has a good bit and I can move the inner gear a decent bit. I don't think there should be that much play but I'm not an expert. Any advice? I'm thinking I'ma have to get another transfer case and then slowly source the parts for mine

Hows the chain?
Mine kinda did the same thing until it rubbed a hole in the TC.

My chain is pretty sloppy however I do not see any marks on the inside of the case like yours. Though whith the case in half I can put it in 4hi and spin it, when I do I can see that the chain is wanting to climb down with the gear if that makes any sense, it appears to be so sloppy it's binding. I'm honestly hoping I can just replace the chain and she'll be happy because I'm rather strapped for cash at the moment

The chain and the pads on the shift forks are your most likely wear items. If you are in there then it would be worthwhile to replace those.