Milky generally suggests water in the fluid.
Dump and re fill is about the only way I can think of 'flushing'.
Try to locate where the water gets in. (possibly gear shift boot)
That Schwartz loader is a nice rugged unit. (have same on my Mitsu)
As to 'stuck selector', since frt is by design in the 5% faster (lead) than rear, there is a wind up effect that occurs making shifting out of 4wd often difficult.
To relieve that tension, jack up your front end using the loader, that or drive on grass.
You should never drive in 4wd on paved surfaces as that 4 sure created that wind up effect.
Are U sure 4wd is inoperable?
Could be a U joint, crown an pinion in frt or shaft.
To eliminate crown and pinion frt differential, jack up the frt end (loader) and spin one wheel and the other side will spin in opposite direction. That should confirm or eliminate differential problems leaving U=joints as a possible culprit.
Mind you the shifter operates a fork that slips a gear in and out of position to engage frt drive which also could be the problem.
On my Mitsu a simple 5 cent roll pin broke causing the shifter to be inoperable.
Lots of luck, enjoy TBN and post your findings.