Hi guys first time posting here! I recently bought a 94 jeep Cherokee 4x4 4.0, and I'm planning on making it an awesome off-roading rig. it already has a lot of off-roading modification and is just missing a few. But before I change anything, I want it running great. The first problem was the transfer-case seal which was leaking so I had to fix it, and it had a slip yoke eliminator so it took a while, especially with the main bolt. I removed the old seal and put a new one in. However, when I put everything back, I encountered a problem and I'm not sure what it is. Basically, it jerks really hard backwards when I put it into Reverse, and jerks forward hard when shifting into drive.
It drives normal however, the problem coming when I shift in 4x4 and it gets super stiff, feels heavy and not normal like any other 4x4. The steering becomes super-stiff as well. and when I got under the car it was extremely hot after driving for 2min.

I would appreciate any help/suggestions you guys have, and if you need any other information let me know.

If you're putting it in 4wd on dry pavement then the stiffer steering is expected since it's binding when turning on dry pavement. It doesn't have a center diff in the tcase. The part time 4wd is not designed to be used on dry, high traction surfaces.

Also, depending on other modifications such as lockers can change the things you're describing. The clunk when you put it in drive or reverse means there is play somewhere, or possibly the Jeep is idling higher than normal. I know my Cherokee slams into drive and reverse because I put a lunch box locker in the rear and there is a lot of backlash. A bad u joint could create a similar situation if there's slop in the joint.