What did I break?

[timyestim]

My 2007 4Runner has been sitting at my cabin in northern Wisconsin, since I had an issue with it last year around Thanksgiving. Here is what happened: I was in 4 hi on a gravel road, came to a complete stop, pushed down on the brakes as I hard as I could, I gave it some gas to see how high it would rev on the stock converter, as I have done before (I know, not smart, but I never claimed to be!). This time, it revved higher than it ever had before, so again being as smart as I am, I went full throttle. This was followed by a loud snapping noise and then a slight grinding noise if I applied any throttle while in gear. No CELs popped up, but I was in 4 Hi, and the light for 4 Lo blinked a little, as if the transfer case was halfway between Hi and Lo. I then tried shifting the transfer case from Hi to Lo and back, and it seemed to do so without issue, there was no noises and the dash lights changed as you would expect. When I tried to move in 4 Hi, there was a grinding noise, but no movement. I put it in 4 Lo, and the grinding noise continued, but I was able to move a few feet until the grinding noise got quieter. Long story short, I called my wonderful wife, who was at home in the Fox Cities, and she drove up after work and helped tow the 4Runner back to the cabin and gave me a ride back home to the Fox Cities.
Since then, I have removed the transfer case, brought it home and opened it up. Nothing seems broken or even worn. The inside looks spotless, the gears do not have any wear on them, the fluid was still clean and not one sign of any debris anywhere in it. This has me thinking it must be something in the transmission, possibly the torque converter itself. But I wouldn't think a torque converter would fail in the manner I described.
Has anyone had a similar issue, otherwise what is everyone's thoughts on what I may have damaged? I plan to tow the 4Runner home and pull the transmission and open it up to see what I can find. I just don't have the time in the next few weeks to get to that yet, so I am wondering if anyone here could at least help me speculate on what the problem might be.

 

[SurferUK]

Was the chain still in one piece?!

 

[timyestim]

Yes, the chain was in one piece and had no visible signs of wear. I was really hoping/thinking it was this too based on the symptoms.

 

[rdruss]

Weakest link in the system failed I would say, whatever that is, usually the driveshaft goes in that situation. Do you have ADD, or whatever it is on the front axle that connects/disconnects front diff? If. I would take a look at it. If not, keep digging.

 

[timyestim]

It's a 2007 V6 SR5, I don't believe it has ADD, just the basic 4x4 system, if I am thinking correctly about what the ADD is. Also, wouldn't that mean just the front wheels wouldn't turn? When I removed the transfer case, the driveshafts and u-joints were all intact and in good shape.