I am in the process of removing the front subframe, I have disconnected everything except wishbones, but the subframe is resting on the transfer case and there doesn't seem to be enough room to drop the subframe. Does the transfer case need to be removed?

 

When I went to NPX2 (new product 2002 X400 AKA X-Type) we were instructed to drop the powertrain COMPLETE with the subframe.(they even sold the dealership a platform jack to lower/raise the assy.)

Then the gearbox and engine could be lifted from the subframe.

Then we learned to separate the engine/gearbox from the subframe and leave the powertrain in situ to save time.
Jaguar 'caught-on' and revised disassembly procedures.
Note: This is a different Workshop Procedure than the one currently described in JTIS 19.

Here is the TSB that might help with some of your questions.