Funny, I just got a '87 from a friend.
Check the exhaust manifold where the pipe from the rear cylinder connects at the bottom of the manifold. It's probably cracked.
Is it a standard or automatic? The standard trans was a Pugeot BA-10/5 That is definately a weak link.
The front axle has a vacuum disconnect on the right (long) side axle shaft. the motor can freeze up, the lines can be ripped loose, the vacuum switch on the Xfer case can go bad, or any vacuum leak in the under-hood system can disable it.
The good news:
The 4 cylinder should have relatively low gearing in the axles. 4:10 seems to be the most common.
'87 was the year everyone yips about for the rear Dana 44 rear axle. I think it was across the board, so you should have one( if the rear dif. cover is round/oval, it's a 35(boo), if it has flat sides it's a -44(yeaa!))
They ditched the NP-207 for '87, so you have an NP-231 transfer case(probably)