'95 S10, 4WD, V6. Here is my situation:

1. Main wiring connector on the transfer case is very clean. There is a connector with 2 wires further back on the transfer case. This connector was wet when I removed it. Otherwise clean.
2. Pushing 4HI or 4LO in any gear except Neutral does nothing. No noise, no lights.
3. Pushing 4HI in neutral causes noise from encoder motor (see video). Both lights blink and go out. It does NOT go into 4WD (verified by turning front drive shaft by hand).
4. Pressing 4LO in neutral causes causes noise from encoder motor (see video) and both lights blink . Sometimes both lights go out, sometimes the 4LO light stays on. It doesn't seem to make any difference otherwise. 4LO DOES put transfer case in 4WD, verified by the front drive shaft.
4. I have earlier replaced vacuum switch with a solenoid vacuum switch. Toggling the toggle switch activates and deactivates the vacuum actuator, independent of the 3 button switch
5. If I took the encoder motor out to check it, could I drive the truck with it off? Or would it leak fluid?

I'm trying to be as specific as possible. Thanks.

4WD_zps75e93e76.mp4 Video by darwin-t | Photobucket

 

When I was having issues with the 4x4 on my 99 ZR2 I had to do a few different things to solve the issue. First problem I had was vacuum leaks, it sounds like you have already checked or replaced that. I also checked the 4x4 computer in the passenger front kick panel and both plugs on that had a lot of corrosion in them, I cleaned them up really well and hook that back up, that made a big difference for me. The other thing I had to do was take the switch out of the dash and open it up, you will see a bunch of bigger solder joints on the back side of the small pcb board in there, I re-heated and added a little bit of good solder to each joint and that has solved my problems completely. Before I did the soldering my lights on the switch still weren't acting right, but I have not had an issue since I did all of that.

Hopefully some of this info helps. Good luck.

 

When you select a mode shift, (2HI to 4HI) you must engage the front axle actuator simultaneously with the mode shift. If the axle actuator is not engaged when you go from 2HI to 4HI, the TCCM will command the encoder to revert back to 2HI. When you select 4HI to 2 HI, you must disengage the axle actuator.

The encoder can be removed without fluid loss.