First, I did lift my truck with suspension 2.5", then body lift.  After the body lift in 2008, the 4x4 gear shift is much more scrunched downed, but since 2008 when the body lift was done, I was still able to shift one (1) place up to the 4x4 with any snow DC may get.

By the shifter being lower now, the shifting did seem a little apprehensive, and did get stuck a year ago when I moved the shift all the way up to 4WD Low.  Anyways, My 4x4 light is not coming on now when I try to engage to 4x4 mode.  The tech at the dealership says that this has nothing to do with the truck being lifted, that the bulb could be out.  After removing the dash, he says that it's a wiring thing, but couldn't figure out what the problem was.  He also says the truck is going into 4x4 mode.  I had him to put everything back since I was using a rental car, and not budgeted right now to pay for a week or so or of car rental.  Spent $100.00 just for 3 day rental and called it quits.

I think It's the shifter, that may need to be extened and or looked at.  Maybe driving with the 4x4 shifter that scrunched down like that, if DC ever gets any real snow, finally did something with the shifter, and it (shifter) needs to be looked at? I don't think he opened and looked at the shifter mechanisim.

Any help in thiis would really be appreciated. 

Here's how I would approach that.

1 - Slide under front of the truck, locate the free wheel air pump - it's behind the front bumper on the right side - and follow the connection from the pump to where it enters the underside of the front differential - make sure it hasn't pulled off.

2 - Whilst you're under there - find the 4WD switch in the top of the transfer case (near the shift lever) and make sure it is still connected - this may have broken because of the body lift.

3 - With the engine off, put the transfer case lever in 4HI, slide under and grab the front drive shaft & try to turn it - you should not be able to - this checks that the transfer case is selecting 4WD.

4 - With the transfer case still in 4HI, switch the ignition on (do not start engine), listen to see if you hear it (the pump) running - it should run for anywhere from 1~10 seconds.  You can either switch the ignition off & on, or shift from 4HI to 2HI and back to repeat the test.

If you hear it run for 1~2 seconds, your 4WD is probably working and there is a problem with the 4WD indicator.

If you hear it (the pump) running and it runs for 10 seconds, disconnect the rubber line that feeds into the bottom of the front differential and plug it (do this on where the short piece of hose leaves the pump and connects to a metal pipe near the fram rail) and repeat step #2, if the light comes on now you most likely have a problem with the actuator in the front differential.  If the pump still runs for 10 seconds before stopping, you probably have a defective pump module.

If you do not hear the pump run, disconnect the 3 pin connector and connect a 12V light between the black & red wires and repeat step #2 - the light should come on for 10 seconds (you could do this with a meter, look for 12V).

If the light comes on for 10 seconds, you most likely have a problem in the pump module.

If the light does not come on, disconnect the wire to the 4WD switch and short it to the body - and check the light again - if it still does not light you're looking at a broken wire or possible bad ECU/4WD controller.

If the pump module is defective, it may be repairable - here's my tear down thread - this is a GV pump, but the early XL-7 used the same setup.

Edited for clarity

Thanks a lot!    Hey, but I will past this along to the mechanic.  I'm not a technically inclined.