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Your Push buttons could be bad, or the actuator that locks the front in is bad. I don't think it has anything to do with your trans. Now, when I had my GMC the service 4wd light would come on every 3000miles. I got tired of it and just changed to fuild in the transfer case. Later on my truck wouldn't shift into 4wd and the buttons would blink on the push buttons and once I changed them out everything worked fine.
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That could be it or the wire could be pinched. The only way to know for sure would be to put it on a lift and check all of the connection or just crawl up under it and check . As far as I know, there is one wire that hooks up and that would be the one that comes from the actuator. And the actuator is black I think, and is oblong looking. I haven't been under my truck lately, so I don't quite remember.