Akellum

i have a 1998 chevy silverado 1500 z71 with a 5.7 vortec and automatic 4l60e tranny. my problem is ever since i replaced the motor and tranny at the same time my 4x4 doesnt work. it is push button 4x4 so i thought it was the actuator on the front axle because when you push the 4x4 button you hear the transfer case engage but the front tires never move. i did sink the truck and the water was just over the bottom of the door jams for 2 days, i replaced the actuator and the front diff still wont lock in, the gear oil did have the murky look of having water in it, could this cause an issue in the diff or axle like something possibly rusting wich is keeping it from engaging? any help is appreciated.

(i have also checked cv axles,replaced gear oil)