[old_master]

Is there vacuum at the actuator when shifted into 4WD with engine idling?

Does the actuator pull the cable to the right front axle shaft when shifted to 4WD? There is a switch at the right front axle shaft housing that tells the TCCM if the axle is locked in. If it's not locked, the TCCM will not allow the encoder to shift into 4WD and the light will blink.

The vacuum switch on the transfer case has 3 vacuum lines to it: One from manifold vacuum. One goes to a vent, usually attached to the transmission dipstick tube near where the dipstick goes in. And one goes to the vacuum actuator. If the switch seal leaks, it will suck transfer case fluid into the lines and must be cleaned out and then replace the switch.

The encoder could also be the problem, as could the clutch mechanism on the right front axle shaft. You can raise all 4 wheels off the ground, transmission in neutral, then manually pull the cable to see if the axle locks in.

Post your results.