For those who haven't been under a Ranger (or haven't been under lately). 99% of BW1350/54 transfer cases have a companion flange on the rear output shaft. So, you don't need to worry about cover plates.
The oil pump for the BW1350/54 is on the rear output of the transfer case, so if the shaft isn't turning the shaft would be oil starved. There is no good setting - 2wd has transfer case bearing dry/4wd would have the transmission output turning without gears generating splash lubrication...
Personally, I just undo the rear flange on rear axle and front u-joint of front axle. I also pull the ignition tumbler, so I don't do something stupid like try to drive it with axles disconnected.
Mark the u-joint yoke and companion flanges, (so you can reinstall the driveshaft in same position it was removed from; nice florescent nail polish works well); then separate the driveshaft and wire it up to the frame. Ideally, you have a spare u-joint yoke that you bolt on to the rear axle - prevents road grime and oxidation of the companion flange, making re-install easier. For the front, a couple spare u-joint cups that you bolt into the front axle. The spare u-joint/companion flange has advantage that you know where the bolts are when you reinstall the driveshaft.
Note 1: The manual shift BW1354 in a '93-97 Ranger* or '91-03 Explorer can be installed in OP's '01 Ranger. You might need to swap some shafts to get the exact outputs you want, but the case and 95% of the internal guts are common across all years. The BW1350 has different front output, so out of contention for this exercise.
*Manual BW1354s might be available 'pre '93 but I see more BW1350s in that vintage Ranger/Bronco IIs.
Note 2: If you are swapping to '98-'00 front, you need to swap hubs, axles and spindles to get manual locking hubs.