Disarming alarm system

1. Battery: Make sure the battery in your key fob is not dead or low. If the battery is weak, it may not be sending the correct signal to the alarm system, causing it to disarm.
2. Programming: Check that the alarm system is programmed correctly. Make sure the system is set to arm in the mode you want (such as "silent" or "beeping"), and that the alarm is set to trigger when the appropriate sensor is triggered (such as door, window, or motion sensors).
3. Faulty Sensor: There may be a faulty sensor that is causing the alarm to disarm. Check that all sensors are working correctly and not causing false alarms or malfunctions.
4. Interference: Interference from other wireless devices or nearby radio signals can cause your alarm system to malfunction. Make sure there are no other wireless devices nearby that could be interfering with your alarm system's signal.

Is the key not disarming the alarm. Get an auto locksmith / autoelectrician to check and test. for faults. Do you have a spare key/ alarm remote control?

Here's some info as it sound like the theft deterrent is armed.

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Reset Procedure

NOTE: This information applies to a Vehicle Theft Security System (VTSS) that was armed when the battery was disconnected and reconnected.

When the armed VTSS senses that the battery has been disconnected and reconnected, it enters its power-up mode. In the power-up mode the alarm system remains armed following a battery failure or disconnect. If the VTSS was armed prior to a battery disconnect or failure, the system will have to be actively or passively disarmed following a battery reconnection.

The power-up mode will also apply if the battery goes dead while the system is armed and battery jump-starting is attempted. The engine no-run feature will prevent the engine from starting until the alarm system has been actively or passively disarmed.

Passive disarming of the Vehicle Theft Security System (VTSS) occurs when the vehicle is unlocked using the key to unlock either front door or the liftgate. Active disarming of the VTSS occurs when the vehicle is unlocked by depressing the Unlock button of the Remote Keyless Entry (RKE) transmitter.

Once the alarm has been activated (horn sounding, lights flashing, and the engine no-run feature), either disarming method will deactivate the alarm.

Depressing the Panic button (if equipped) on the RKE transmitter will also disarm the VTSS, but the horn will sound and the lights will flash for about three minutes as part of the Panic feature. The horn and lights can be stopped by pressing any of the RKE transmitter's buttons or driving the vehicle above 15 mph.

Here is excerpt from the 1998 Jeep Grand Cherokee Service Manual ... i know you posted under 1997 JGC but this information may be helpful ... by "reset alarm" i believe you meant disarming the alarm?

“Arming
Passive arming of the Vehicle Theft Security System (VTSS) occurs when the vehicle is exited with the key removed from the ignition switch, the headlamps are turned off, and the doors are locked using power lock switch. The power lock switch will not function if the key is in the ignition switch or the headlamps are on with the driver’s door open. The VTSS will not arm if either front door or the liftgate are locked using the key in the lock cylinder.
Active arming of the VTSS occurs when the Remote Keyless Entry (RKE) transmitter is used to lock the vehicle, even if the doors and/or the liftgate are open when the RKE transmitter Lock button is depressed. However, the VTSS arming will not be complete until all the doors and the liftgate are closed.
Following successful passive or active VTSS arming, the VTSS set lamp on the top of the instrument panel will flash rapidly for about 15 seconds after the illuminated entry system times out. This indicates that the VTSS arming is in progress. If the light stays on steadily during the arming, it indicates that the hood switch is closed (the hood is open). The VTSS will still arm if the hood is open, but the engine compartment will not be protected. Once the 15 second arming function is complete, the set lamp will flash at a slower rate to indicate that the VTSS is armed. Disarming Passive disarming of the Vehicle Theft Security Sytem (VTSS) occurs when the vehicle is unlocked using the key to unlock either front door or the liftgate. Active disarming of the VTSS occurs when the vehicle is unlocked by depressing the Unlock button of the Remote Keyless Entry (RKE) transmitter. Once the alarm has been activated (horn sounding, exterior lights flashing, and the the engine no-run feature), either disarming method will also deactivate the alarm. Depressing the Panic button on the RKE transmitter will also disarm the VTSS, but the horm will sound and teh exterior lamps will flash for about three minutes as a part of the Panic feature function. ..." And as an additional note, if you have the courtesy interior lights set at 30 seconds like i do, you have to wait until lights go out (with alarm still sounding) before you can disarm the alarm via passive disarm method... what a pain when you don't have the actual RKE handy... Good Luck!

alarm remotes not disarming system look in manule for instructions on how to place alarm in valet mode
to disable alarm

Alarms usually won't allow the engine to crank. If it is the alarm, arming then disarming it usually gets them to start. However, you probably aren't that lucky. Probably the most common problem for Cherokees with ignition issues is a crank sensor or a fuel pump. Listen to hear if the fuel pump runs when you turn the key to the run position (it will only run for 2 seconds, so have someone else turn the key while you listen at the gas filler neck)

There no switch to manually disarm . The ignition key has micro chip on it and that the only one used for disarming (OEM)

Try this,I think this will work.Unplug the Remote anti-theft module in the right hand kick panel.It will have 2 connectors,one is 22 cavity connector and the other is 26 cavity connector.
Now best I can tell by looking at the Schematics you will have you take the wires from pin 11 PK/LG and pin 22 PK/YE in the 22 pin connector and pin 1 LG in the 26 pin connector and run these to a ground.Then leave the RAP module disconnected. This should keep your electric door locks working and disable the alarm.

Alarm Module Reset Procedure
NOTE: This information applies to a Vehicle Theft Security System (VTSS) that was armed when the battery was disconnected and reconnected.
When the armed VTSS senses that the battery has been disconnected and reconnected, it enters its power-up mode. In the power-up mode the alarm system remains armed following a battery failure or disconnect. If the VTSS was armed prior to a battery disconnect or failure, the system will have to be actively or passively disarmed following a battery reconnection.
The power-up mode will also apply if the battery goes dead while the system is armed and battery jump-starting is attempted. The engine no-run feature will prevent the engine from starting until the alarm system has been actively or passively disarmed.
Passive disarming of the Vehicle Theft Security System (VTSS) occurs when the vehicle is unlocked using the key to unlock either front door or the lift gate. Active disarming of the VTSS occurs when the vehicle is unlocked by depressing the Unlock button of the Remote Keyless Entry (RKE) transmitter.
Once the alarm has been activated (horn sounding, lights flashing, and the engine no-run feature), either disarming method will deactivate the alarm.
Depressing the Panic button (if equipped) on the RKE transmitter will also disarm the VTSS, but the horn will sound and the lights will flash for about three minutes as part of the Panic feature. The horn and lights can be stopped by pressing any of the RKE transmitter's buttons or driving the vehicle above 15 mph.

it is very easy to disarm the secutiry sys however does the vehicle crank or is it totaly dead??