Thanks for the input guys I'm not very good at explaining, especially when I say "into" instead of "out" of the transfer case. I bleed the clutch on the chance it was the issue, but no change. I'll look adjusting the throw of the clutch pedal next and also check the hand brake as it didn't cross my mind that it could be stuck too.
I'm now thinking the clutch isn't releasing properly as I can spin the wheels when its in gear, should have already checked that. The clutch must be letting a little power through when its running. I hadn't realised it wasn't going into gear now because we put it in gear, reverse and third, when we unseized the engine. This might have killed the clutch I suppose as it had sat for a number of years.
I've also noticed the lever for hi/low just drops down, doesn't stay up which seems wrong. Of note this is my first land rover apart from a borrowed one when I was in the UK and I never used the transfer case. I'd like to get the wheels to turn before I start to do the restoration, purely to put a smile on my face.
Either way I'll start stripping it down in the new year when shed space is freed up. I have a lead on a chassis that was galvanised many years ago but needs work and is less swiss cheese than mine.