Having, at vast expense, had a '96 Disco for four years (sold it in September for a MY01 WRX wagon with PPP), I can confirm that it had permanent 4WD, and a lever that would transfer between the high & low ratio boxes and lock the diffs.
Having driven off-road with the diffs locked, it was sometimes necessary to reverse a little to 'unwind' the diffs. It was also like driving on ice.