03 3500 4X4.
This will always happen at start up, Sometime the LED's on the button cluster will show 2high but almost more times that not it will start up with indicator light Neutral or 4Low lit. The truck will still be in 2high but the lights will be indicating something different but it is always still in 2high.(IT IS NOT CHANGING TO LOW OR NEUTRAL) Some times I can press the 2high and the light will flash and then stay on steady showing 2high and other times I have to shut the truck off and restart it. sometimes takes several restarts to correct this problem. Up until yesterday I have not noticed any mechanical changes tho. yesterday while is would not light the 2high and was showing 4low I was driving with my window down and I could here something that sounded like the chain was VERY loose in the transfer case. This was the first time it actually shown a mechanical change. Once again, it would not let me select 2high. After I stopped and restarted the truck it came up showing 2high and the noise was gone that was coming from the transfer case.
Some say button selector assembly, some say transfer case module and others say servo motor on the Transfer case....UGH!!!!!
********************WHICH ONE IS THE PROBLEM?*********************

 

you really need to check codes to narrow it down

 

Well so far there is no codes...

 

youd have to use a snap on or similar scan tool, tech 2 would be best. usually the encoder motor is the problem but not always. bad grounds can cause problems, worn t-case, and like you stated could be the switch or the tcase module. most of the time they will default to 4lo and be stuck there or the owner will select 4lo and it wont come out. if you have access to a scan tool you can check your switch but, most of the checks are with a multi meter