I also have an L35 but no issues other than leaking hoses so far. The front seals might be out of it causing all the fluid to have leaked out. Driving down the road would cause the bearings to heat up and seize. Putting it in 4x4 would force the wheels to turn. It might be something as simple as putting in new bearings and new seals. One way to test it is to put a light weight oil in the front end, let it sit and see if it leaks out in a day or too. If it leaks out I would be pretty sure that it was the bearings overheating that caused them to seize. Pretty cheap fix maybe. Try the easy things first.
I had a Ford 1520 and wrecked the front end lifting and pulling stumps. It ground the teeth off the front gears, was only $500 to repair so considering how much damage I did I thought it was cheap.