Try disconnecting the 4X4 module or TCCM (transfer case control module) connectors for say 30 seconds. The module is located behind the 4X4 switch/headlamp switch panel down next to the cluster. This may reset the module and allow the shift to occur. If so then suspect a 4X4 module is faulty. Try this and let me know what you find ok.
These systems also had problems with the switches so if disconnecting the module doesn't work have the system scanned and see if there are any trouble codes and if they pertain to the switch.
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GM Mark of Excellence/ Service Guild Participant with 13 years experience, ASE Master Certified