There severeal possibilities. Without actually scanning the 4WD system I wouldn't know for sure which bulletin applies. Here are some bulletins that do apply but would have to be performed by your dealer as it may require software upgrades, part replacement (with software upgrade) or at least scanning with the GM Tech 2 scan tool.
This PI is being superseded to add transfer case models. Please discard PIP3526A.
The following diagnosis might be helpful if the vehicle exhibits the symptom(s) described in this PI.
Service 4WD light comes on and the condition may be intermittent and hard to duplicate. DTC C0306 OR C0308 will be set in the transfer case control module.
If published diagnostics do not lead to a correction, check all grounds for poor connection. If the grounds shown in the transfer case schematics are clean and tight, also inspect the engine grounds, as other components grounding through suspect grounds can then seek other ground paths and interfere with transfer case operation. Battery cable engine grounds as well as grounds located on the back of the engine cylinder heads and engine block are possible sources of this concern.
Also make sure grounds are mounted to the correct location. For example, a ground that should be on the frame possibly moved to the core support during a previous repair may also cause this concern.
Please follow this diagnostic or repair process thoroughly and complete each step. If the condition exhibited is resolved without completing every step, the remaining steps do not need to be performed.
PI is being created to update models and years. Please discard PIP3424
Electronic transfer case may stop shifting if you repeatedly try to shift the transfer case in a short period of time and not set any dtcs
The software in the transfer case control module has a "shift abuse lock out" mode to protect the module and encoder motor. This concern will occur if the module senses repeated shift request in a short period of time. If the driver continuously tries to shift in and out of different modes, the transfer case control module will stop trying to shift for several seconds to prevent abuse damage to occur. Cycling the ignition off for 30 seconds or more should allow the transfer case to resume normal operation.