One problem related to transfer case has been reported for the 1998 Ford Ranger. The most recently reported issues are listed below.
I was driving my 98 Ford Ranger at hiway speed when the transmission case and transfer case exploded. It appeared as though the transmission had locked up for no reason at all. When it locked up it sounded just like a tire had blown out. I called the local dealer and explained the problem. I told them that I was out of time on my warranty but, I wasn't over on the allowed milage. They told me that they were quite sure if my truck didn't have obvious abuse that Ford would still cover it under warranty. After they disassembled my transmission they told me that it looked like I had put it in park while going down the hiway, which is totally ridiculous. The truck has been well taken care of. Ford decided not to help with the repair bill because of what the dealer had told them. I guess the bottom line is, if the transmission had completely locked up at that speed, instead of blowing apart, they could have been several injuries because I was driving in heavy traffic on a six lane hiway. There is no doubt in my mind that this was due to some kind of part failure. I was just driving on my way to work when it went.