Could be a couple of things. The shift motor could be stuck or "lost". By lost I mean that if the plastic stop inside on the contact gear breaks or gets misshapen the switch plate goes beyond where it supposed to and the GEM gets lost, not knowing where it is. The other thing it could be is the vacuum operated CAD(center axle disconnect) could be not releasing. If this were the case the 4wd light wouldn't be on but it would feel like it was still in 4wd. You can check the shift motor by removing the 4 bolts that hold it on and looking under it. The shift ranges are marked on the t-case under the motor. The selector shaft is triangular and the pointed side will be facing what ever range the case is currently in. If it is pointing at 2wd then your problem may be in the CAD. If it is pointing at either 4hi or 4lo and the dash light isn't on the motor may be fetched up. If you shift the 4wd range switch into 4wd do you hear the motor switching and does the 4wd indicator on the dash come on?