Hello, new guy from Ohio here. I've tried to do research on this issue and nobody seems to have ever had the exact same problem as me. I am traveling next weekend in my rv and pulling my suburban for the first time. I went to test if I could shift the transfer case into neutral and ran into some problems.
I am able to shift into any other selection on the **** and I hear the motor whirring under the vehicle. When I go to put the transfer case into neutral I follow the steps given by the owner's manual. Key on, engine off, transmission in neutral, shift to 2wd high, go all the way to the other side and hold it in neutral for 5 seconds until the red N flashes. When I do this, the red N flashes about twice and then all the lights on the selector switch go out and I get a "service 4 wheel drive" message. If I pull the 30 amp fuse in the engine bay for the 4wd and wait a few minutes and put it back in, the service message goes away and I can select any of the 2wd or 4wd options again. It just repeats this problem for switching into neutral. I doubt it is a switch issue but I ordered it just in case since it is only a 25 dollar part. Is this a computer module issue or one of the motor/ sensors on the transfer case? If anyone knows whether I could unplug motors and sensors and ohm it out to check for proper readings, I would be happy to do that with some guidance. I hope that I have been descriptive enough to help you to help me lol. Thanks for your time in reading into my situation.

 

I think you did the right thing and ordered the part, as it worked fine when you did that. Oh for the days when the transfer case was totally manual shift like my Jeep CJ-5. It even had a "two-low" position for backing out of parking spaces. Cant complain however
as my 1998 K-1500 has never had issues at all. It has the floor shift.

 

I received the new switch but haven't installed it yet. I made an appointment with the dealership to receive a diagnosis Monday. I've seen a lot of people say that they have changed a whole bunch of parts and they found out that they needed a reflash from the dealership, so I'm just going to start there since they have the computer to talk with the transfer case computer in the vehicle. If, of course, the switch fixes it then I'll cancel the appointment. I'll update as I go along.

 

As an update, the $25 switch fixed the issue. we are now going to be able to flat tow the suburban for our trip next week since it shifts to neutral now. I will be cancelling my appointment at the dealership

 

I am very glad to hear that. Dealerships can get really expensive, so you saved lots of money