There is a big write up about this on Yotatech. It seems to point to the electrical sensors on the diff. They move in and out with the actuator and tell the 4wd computer when 4wd is engaged / disengaged. But what happens when they fail is that they don't give the signal to the computer and you end up with the flashing light on the dash.
You can test them with a multimeter for continunity.
Big write up here...
You can test them with a multimeter for continunity.
Big write up here...
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