4WD 4Lo issue

'04 SR5 Tundra-
I'm able to get it in & out of 4-Hi without any problem but can't engage 4Lo.
I am following the proper procedure to engage 4Lo:
1st- while in 2WD, press 4Hi button, solid green light and 4Hi is activated and working fine
2nd- place transmission in Neutral
3rd- press 4LO button. All I get is flashing amber light and I can't get back to 4Hi or 2WD.
The entire drive is now locked up. I have to remove the cover to the actuator on the
transfer case, disconnect the shift rod to get the system unbound.
Wiring is OK. Pin to Pin tested with ohm meter and all connections tested OK (rear transfer case actuator harness including both switches, ADD on front differential harness and all points on ECU harness. All connections had continuity. Using FSM.
Cover of transfer case actuator is aligned properly with internal gear. The gear pins align at the correct point depending on whether I am in 2WD, 4Hi or 4Lo. However, I'm not certain if cover to front actuator is properly aligned with the internal gear. Inside of both actuator covers are in great shape- no corrosion or breaks in the strips (not sure what it's called). Both vent tubes are fine too.

I go on the beach in 4Hi and all is OK, but it would be nice to be able to engage 4Lo if I ever had to.
Any suggestions where to go from here? Thx.!

 

Did you run thru this guide? https://www.tundras.com/threads/1st-gen-4wd-issues-diagnosis-prevention-guide.149189/

 

This makes me wonder if the transfer case shift rod isn't positioned correctly. What do you mean by "the drive is locked up"? The driveshafts are locked and the truck won't move? Or the shifter mechanism is locked up?

Based on your extensive electrical testing (good for you!) I'd be inclined to think that it's a physical problem, not an electrical one.