The sm 465 has a 32 spline output so your current transfer case isn't going to work. The 700r4 has a 27 spline output. You can't use the transfer case from the 86 because the front output is on the wrong side.
I can't recall if a 86 has manual or hydraulic clutch but a manual is going to take a little fab work on the frame because of the two different truck styles.
If it's hydraulic the slave cylinder may be on the drivers side which will interfere with your front drive shaft.
Long story short I'd look for a sm465 or nv4500 with transfer case out of a 88-98 body style.
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