1978 Jeep CJ7 transfer case stuck?

I recently got a jeep from my uncle for free. ITs my first one. It drove around fine when I got it but didn't stop. So I jacked it up and replaced rotors, calipers, drums, shoes, all hardware, all hard lines and rubber lines. Then I rebuilt the carb, replaced cap, coil, rotor, wires and plugs. Started and ran fine. But when I put it in gear it wouldn't move and it sounded like the gears in the trans/transfer case were grinding. I tried it in all positions. 4h, 2h, 4l ect. When I jacked up the rear and put it in drive the back tires spun, I put it in reverse and they spun again. But when I hit the brakes the grinding sound in the trans/transfer case returned. Either way with the wheels on the ground or resistance from the brakes the grinding sound is there and it wont roll anywhere. Fyi its a 350 swap, don't know the trans or transfer case and its an automatic. It appears to be full of fluid.