pull the codes from the tccm. this site will tell you how to do that. scroll down the page a ways
S10/15, Blazer, Jimmy-Diagnostic information: 1991 & newer push button 4x4 - ChevyTalk --The Social Network for Chevy Fans
if it stored a code it will tell you whats wrong.
also check the transfer case fluid level. its the top plug. 30mm socket to get it off. bring a drain pan. if its over filled it will start pouring out. the inner seal front imput shaft seal in the transfer case usually goes bad on thes trucks. when they do oil from tranny over fills the case 3qts over full. it will get into vacuum lines and destroy them. and will push past the seal inside the encoder motor and fill the electric motor up will tranny oil causeing it to fail. happend to my 93 s10 blazer. pulled the encoder motor off and took the black shield off the electric motor and was filled with transmission oil. there NOT supposed to be filled with oil. got a brand new one and was dry. if you decide to replace the encoder motor take the plastic black housing off the motor itself and see if its filled with oil. and please help me confirm this problem. i think the screws holding the plastic motor housing are t15 torx bits. maby t20.