sounds like the clutch is not disengaging fully from the input gear.
if the layshaft is running and the output shaft is not then the syncro cannot spin up the free gears and so you cant select anything.
once you go into neutral the syncro will spin the gears( plus output shaft) and the shifter will work (but not great, there might be slight crunch still)
i would look at the clutch system, might need bled, or the arm(in the bellhousing) might be knacked, etc etc.
if you put the car in 1st gear with the engine off, handbrake on, transfer box in low/high, jack up 1 front wheel and start the engine with the clutch pedal in, the wheel should not spin. the wheels should only spin if the pedal is released.
or sit on a gentle hill with the car in gear, engine off, clutch pedal down, the car should go down hill, clutch pedal up the engine should hold the car stopped.