I take it that by pushing the button you are engaging the 4wd.its not the old linkage type. The light blinking may mean that the the vehicle
is not seeing transfer case engagement. there has to be a motor or something to engage the transfer case. do a visual inspection under the truck
to see if anything is torn or hanging.maybe in your inspection you could put the tuck on jack stands and have someone engage the 4 wd
and you can see what sounds like its trying to engage. good luck and keep us posted. C8-) found this link. it explains a few things
http://www.fixya.com/cars/t639984-2001_ … heel_drive