Just some more info guys (this is my little sister, who lives over 1500km away from me, this is my old Explorer). The transfer case problem is separate from the O/D issue. I was having the O/D issue when the truck was mine and I replaced the TPS and it made it happen less frequently, but it still did it. Then, eventually, the transfer case started to go out of it (bad grinding when trying to go into reverse, tranny would go into gear, but the T-case wouldn't) but it happened VERY rarely.
My dad ended up buying the Explorer back from me (I bought a Mustang) and sent the truck to the tranny shop. The guy had the vehicle for over a month, replaced the transfer case and a "sensor" on the transmission. What he replaced exactly was pretty vague, and I was hearing about this over the phone from my dad who was trying to describe what he was told as best as he could. Well, the problem persisted and the tranny guy kept stating that this "plug" kept getting un-plugged so he ended up putting some GLUE on it!!! Anyways, after that, the problem was still there and my father has refused to take it back. This was several years ago.
She has been driving the Explorer like this for a number of years now, the transmission is in limp mode, but when it first started doing it for me (in like 2002) the shifts were so hard they hurt your neck. Its not like that anymore, its still definitely shifting hard, but no where near THAT card, so I'm wondering how much damage/wear has been done by it being driven in limp mode for so long? The truck has pretty high mileage on it now (close to 300,000Km, though I'm sure BlueLagoon can fill us in on the exact figure) but its her daily driver and its my feeling that it really should be fixed. I didn't have the money to fix it at the time, Ford told me it was a seal? and dad's attempt at getting it fixed seem to have been in vain.
Any input would be appreciated.