The NP 231 transfer case is vulnerable to catastrophic problems (explosion) when the front drive shaft CV ball freezes. This is the ball between the double u-joint at the transfer case end of the front drive shaft. They are usually good for many years, but when they start “chirping” or “singing”, it’s time to change those u-joints and centering ball.
I’ve not heard of this problem when towing the jeep, but is certainly is possible. As stated earlier in this thread, the front axle shafts, differential gears, and drive shaft are always spinning in most YJ’s and TJ’s (only aftermarket hub lockout can change this). If the driveshaft freezes at the point where it connects to the transfer case, it will rip the TC apart.
Here’s a thread on this subject: http://www.wranglerforum.com/f5/np-231-explosion-193097.html