Hi , is it a 3 or 4 button system?. If the encoder motor is engaging the Tcase than you will have to check why the front diff is not locking....possible vacuum related . I once seen a 3 button that would engage the Tcase and the switch lights were solid not blinking but the diff would not lock due to a disconnected hose at the the vacuum reservoir behind the drivers fender.

 

The front axle is engaged fully when vacuum is supplied to an actuator that pulls on a cable so that the axle is engaged. The hoses that supply vacuum to this system along with the HVAC system will rot over time and allow vacuum to leak. When this happens, there is also often a simultaneous issue with the HVAC air delivery operating oddly; e.g. when the engine is under load the air will change from being directed to the windshield to the instrument panel vents.

Another failure point is the transfer case control module (TCCM). This is a small box of relays that can go bad which lives behind the right kick panel. This should click whenever the transfer case is sent a new setting; e.g. 2Hi to 4Hi, 4Hi to 4Lo, etc. When the TCCM is in the midst of failing, it will often click a lot. However, it can fail with no clicking what-so-ever.

To address the vacuum system, I'd refer you to the link to the thread at the bottom of my signature (below) in which I described replacing the vacuum hoses on my 4-button (Auto-4wd) system. For the TCCM, do a search of the forum and online for videos on how to check and replace them. For the TCCM, some have reported an issue with the electrical connectors becoming corroded.

Good luck and be sure to report back what you find.

 

 

Your picture did not come through but none-the-less I'm glad when others can benefit from what I learned the hard way. LOL

BTW, you might replace all of your vacuum hoses while are at it so prevent headaches later.