It's a relatively simple design with very few failure points, but the shift rail bore issue is what it's notorious for. They're all destined to fail there sooner or later. It's that t-case's achillies' heel. Also, for every one of those you read about, there are tens (if not hundreds) of thousands of them still rolling down the road every day with nary a hint of an issue. My guess is that the manual trans accelerates the wear on the shift rail bore due to the constant loading/overrunning of the drivetrain typically seen in a manual trans vehicle.
The only direct plug-n-play case will be out of another 97. The 95-96 will have the speed sensor, but will have a u-joint flange front output. The 98-01 will have the proper flange, but not the speed sensor (as you discovered). Someone rebuilt one several years ago (IZWack comes to mind??) with a hybrid setup... used the old rear case half from a 97 case and the front half and guts from a 98-01. It worked, but the issue with the shift rail bore on the back half from the 97 will still be there.
You need new or rebuilt case, plain and simple, possibly a shift rail depending on how the ends look, and the pads that go on the end of the shift fork. Check the planetary gears closely for any signs of wear too... I've seen some pics here of some pretty gnarly ones.
Good luck!
