I've yet to find an exact help page or manual area for troubleshooting the American or equivalent version of the FULL SIZE 1999 - 2006 generation 3 Montero / Pajero. There's one for the UK I found written in 2006 and all the photos look different...it's for a right-hand drive model of unknown motor/body type.
See the FAQ thread above. I can tell you haven't read it thoroughly. This is addressed there. BTW, I'm not trying to be a jerk here. Just want you to check it out since we all spent a lot of time creating it and it really can be an excellent resource for you.
I have flashing lights and failure of the front axle/hubs to engage or disengage when I change the electronic shift selector. I can sometimes get it to cooperate with much jiggling of selector lever, moving around, juicing it, or turning the ignition on and off, but not always. And it seems random what makes it work again.
The lights only flash when I try to engage or disengage the 4wd. When its operating correctly in 2wd I don't have blinking 4wd or Center Differential lights.
Any references to good trouble shooting procedures or help would be appreciated.
I'm also looking for any information about making the front hubs manual locking or otherwise upgrading so the system is less electronic / switch / vacuum dependent. Anyone tried changing your Montero to a better engagement system and/or manual hubs?
Again, please read the FAQ threads above as although I can't be 100% certain this may be addressed there as well in the
How To Fix & Maintain section.
It could just be the lights are failing and not actually the transfer case. I'm not 100% sure on this but earlier Monteros were all Mechanically actuated transfer cases and the indicator was lit based on the transfer case levers position via a solenoid. The most common problem was a failing solenoid.
Alternatively if the car is physically not disengaging the front drive train, then it could also be addressed by following the noted procedure in the FAQ post above.