This could be due to a variety of things (ala cable/connection,
computer module, stuck transfer case motor, etc). The only way to
really know is to have it scanned.

Short of that, check the electric motor sticking out of the transfer
case. See it it makes any sound when switching drive modes. If not,
check the connection, and if good maybe give the motor a little wrap
with a hammer or mallet (this sometimes unsticks stuck motors).

hth

That's a pretty classic failure mode for the motor on the side of the
transmission case.  Usually it's just stuck for one reason or another.
Mine did the same thing two months ago.  I pulled the motor and opened
up the gear end of it to put new stops in it and lube it.  Tested it
for movement by hooking it to 12v to verify the motor itself worked
(It did) before putting it all back together.  There are marks on the
transfer case shaft that the motor butts up to showing how to point it
for the various modes.  You'll want the motor set to the same position
as the TC shaft when you put it back together.  I put mine back on and
it worked fine again.  If you feel you are not up to the disassembly
of the motor and putting new stops inside (the original nylon ones
usually disintegrate, I made new ones from rubber fuel line) you can
buy a new motor (which I assume includes the gear end but I could be
wrong) for about $150 and put it on.

Thanks for your input.................much appreciated.