I'm preparing to put the trans and transfer from a 98 XJ 4.0 AW5 auto and NP 231 transfer into a 97 ZJ 4.0 42RE auto and NP 242J transfer what's needing and is it possible?

Oh it fits, but getting it to function is the trick. First of all, they use different TCM's to control the shifting and the PCM will probably need to be reprogrammed. If you swap the 242 for the 231, you'll need the XJ driveshaft, I think. You'll also need the XJ's trans shifter, so you might as well use the whole center console. If the 242 is functional, why would you want a 231? They also use different NSS's. The electronics could become a nightmare.

I'm thinking the 42re is screwed, am I correct?

Ya and I can still use the 242 if need be but as for the AW5 trans I've just seen it to be stronger maybe just from what I've read but I've actually got the whole 98 XJ 4.0 so I can use whatever I need it's been rolled but the drivetrain and suspention are good

Oh ya this 42re is done though ya

Ive heard of aw4 swapped into wranglers a couple of times and I think I've seen a zj or 2, but it might be tricky. Either transfercase should be fine. I believe they make shifters that you can use without a computer for the aw4 if you can't get the factory parts to work.