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Transfer case stuck in reduction mode

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Just like it sounds - seems like my transfer case is locked up. I suspected the actuator, so I replaced it. The LED on the selector indicates reduced mode when I start up, if I put it into neutral and on the brake and attempt to turn reduced mode off, it will flash like it is attempting the change, then I get a 4WD error on the dash and the selector becomes inactive. Like it is attempting the switch, but fails. No sounds that I can detect from the actuator from within the car. 


When I was replacing the actuator, the there is a divot in the sprocket that did not line up, so I connected it and turned the ignition on to advance it into the correct orientation to install. That worked, making me think that the actuator is fine and it is some kind of mechanical lockup inside the transfer case. Changed the fluid, didn't look terrible, appropriate volume came out. Nothing warned me this might happen like any grinding, bumping or other funny business. 


Codes that seem relevant are: 2050 for mechanical switching error, 2039 potentiometer short circuit, 2033 potentiometer 2 short. There are others: DME control module 1314, and on occasion I am getting intermittent PSM failure light on the dash as well. 


Next suspicion for me is the module, or potentially corrosion in the wires coming to and from the module under the footwell passengers side carpet - I have seen this in the past for causing other random issues in this vehicle. New battery in it from just a few months ago. 


Anyone here seen anything similar or have any suggestions?


Thanks - Mark 

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