Thanks for the comments. This shifter is stiff, not due to binding but rather due to the shifter itself being stiff. With the front axle off the ground (loader bucket turned down then forced down) it takes enough force that I fear breaking the shift linkage, as I have seen others post here. I use 2wd where it's sufficient and when I go out on the un-paved easement.
The entire apple orchard gets disced so its so lumpy that you risk a twisted ankle walking around. And most everywhere is sloped. My experience is steering doesn't pull the nose around in 2wd, one brake is often needed to change direction in 2wd.
The first YM186D - without loader - that I had for a couple of years had the wrong, oversize, front tires and the spline on the input shaft (pinion) as well as the front driveline U-joint were damaged, as you predicted. No damage to the axle internals.
Before putting that tractor in service I bought the U-joint (rare, Honda ATV axle for just a couple of years) and had a machine shop drill and add two set screws. And got the right tires.
6.00 x 12 (the taller tire) and a 6-12 (the size Yanmar specifies for YM186D).
Typical use.
Anyhow - yes as everyone pointed out Swampfarming's observation sounds like a broken, jammed ring gear. And the issue now is how to find parts to repair it.