You might even have to take it off and clean it up. Some of the shifters may have rubber bushings and the steel shaft rusts inside. If the oil does not help try backing off the mounting bolt and then spray it good and move it in and out of gear. Your transfer case should take ATF for fluid.About a quart and 1/2. There is a drain plug and a fill plug on the back side of it. Make sure you clean all the gunk and dirt out of the plugs before you even try to take them out.
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