Just updating this thread, I decided to get the truck to a good friend who has a Snap-on Scan tool that would read the trouble code.
The encoder motor code comes up!
So, gulp, I ordered an EM for it, and we'll see.
It's going on this afternoon, I keep you posted.

 

Well folks, no luck with the EM. I installed yesterday and still nothing.
I guess there's no getting bent all out of shape over it.
I'll keep plugging away, but am miffed as to why the scantool said it was the EM. Damn.
Although I'm not sure the encoder motor didn't need replacing anyway.
One strange thing did happen yesterday, after I got the new EM installed the Blazer had no gears, and no park. Thought to myself oh no, what have I done to it now.
Turns out, I removed the EM and clicked the TC shaft 1 click clockwise. Then all was back to normal again with the gears. But I had the have it in the original position in order to get the EM on. Somethings freaky....probably me!

 

have you tried tracing every single damn wire installed on your truck? it worked for me...

 

lol.....ya, looks like that's the route I'll have to take.
Was reading your thread, glad you got it fixed.
I'm really suspisous of the wires going into that orange pack on the TCCM.
I'm going to take Kyle's advice and go through each and every one.
A bit of a pain to do but it seems like the only way to get piece of mind.
Just have to find the little tool he's talking about, the parts guy I go to had one but it was too big for what I need. Of course the smaller one I require is on BO.

 

I dont know if this helps but I actually moved one of these motors BEFORE it was in the transfer case. Everyone told me it was junk and I could not reorient it correctly, but that one is in the truck and working fine. 2 of the terminals are a power brake and each of the other two turn it left and right (the 4 prong terminal). I made 2 custom jumpers with clips on the ends and put them in to the plug. I remember that the left and right all you had to do is change from - to + or + to - each had to be different and I think the other two you had to send power to to disengage the brake. I took and jumpered it to a 12 volt source and kept moving it till it fit back in the tcase correctly (this will take a little patience). Once i REPLACED the terminals that were green (i tried to clean them too and had no luck) the 4x4 works great. The terminals are made by a company called delphi-packard. Good luck getting the right ones we ordered many before getting the correct ones. On mine we replaced some under the ps kick panel and all of the 6 prong connector on the side of the encoder motor.