My friend has a 2005, 1500 CC Z71. When he puts the 4x4 selector buttons in 2hi truck will not go and shows service 4x4. When he puts it in auto it runs just fine and code goes away. Could this be an issue with the encoder or just a transfer case issue. Truck has 150k and is bone stock. Any help will be greatly appreciated.

 

What code is setting?

I've seen some weird problems when the encoder motor sensor fails. This might be your case here.