To diagnose the cause of this condition you need to know the fault codes that are stored or nobody can fix it.
Diagnostic Trouble Code (DTC) Displaying
The transfer case shift control module is equipped with the ability to store diagnostic information, which is useful to a technician in the event of module, component or wiring failures. This information can be retrieved from the transfer case shift control module by way of flash codes, which are displayed on the three transfer case shift control switch buttons. These buttons are located on the instrument panel to the right of the steering wheel Before obtaining DTCs, perform the following transfer case control module (TCCM) Self-Test.
Observe the transfer case shift control switch indicators while turning the ignition switch to RUN. A properly operating system will flash all indicators and then will return to the current gear. If the system is operating normally, then proceed to Displaying Codes.
If the TCCM failed the Self-Test, then test the following circuits.
* Battery Positive Voltage (40 and 1640), and Ignition 3 Voltage for battery voltage
* Ground Circuit for ground
* Diagnostic enable circuit for an open or high resistance
* Transfer case shift control switch connector
If the above circuits are normal but the TCCM still fails the Self-Test, replace the TCCM. Refer to Transfer Case Shift Control Module Replacement .
Turn OFF the ignition for 10 seconds.
Connect PIN 13 on the data link cable (DLC) to a ground. The DLC is located in the cab under the instrument panel on the driver's side.
Turn ON the ignition, with the engine OFF.
Observe the transfer case shift control switch select buttons for flashing codes. Refer to Diagnostic Trouble Code (DTC) List .
Important: If the transfer case shift control switch buttons all blink only once and then stop, no fault codes are stored in the transfer case shift control module.
* When one DTC is stored in memory, that code will blink that number of times followed by a 3 second pause and then repeat.
* If more than one code is stored, the first code will blink, followed by a 3 second pause and then the second code will blink.
* This sequence will continue until PIN 13 on the DLC is no longer grounded.
* If the TCCM will not communicate the presence or absence of DTCs, test the above circuits in Self-Test Step 2. If the circuits are complete, then replace the TCCM. Refer to Transfer Case Shift Control Module Replacement .
Credit for this answer goes to gstacey of 2carpros.com