First, go buy the BGB(toyota factory manual). It is pretty clear that you should NOT drive the car with the tranny switch in any position other than normal AWD mode. The other two positions are for dyno/brake machine testing only and can cause damage to the tranny if driven that way.
Second, diffs are not that difficult to work on. Only a few moving parts in there. You could check with some JDM importers and see if they can get you one which would save you some trouble, but if you wanna rebuild, just follow the directions in the BGB and it's pretty simple. You may need access to a press or something to get bushings or gears in and out. I haven't looked at our car specifically. I'll check my book when I get to work today and see if it's the same as any other rear diff.
Also, check out
www.alltrac.net for support about your car specifically. I hang out there under username "dogbite".
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Bob Raby
Santa Cruz, CA
'88 Alltrac (broken)
FOR SALE
'87 4x4 Toy Truck
SOLD
'90 4Runner (3.4 swap, CA certified legal with K&N intake, modified thermal coated headers, 2.5" exhaust, and almost as fast as a stock 3rd gen

)
SOLD