There are probably at least a dozen threads on this issue on this site. It's not uncommon on a 17 year old truck.

Look under the driver's floorboard area. You'll see a frame extension with ground wires bolted to it. Unbolt that ground and clean it REALLY well, down to bare metal, and clean all the wire contacts and put dielectric grease on everything and bolt it back together.

 

After the grounds pull out the switch. They are notorious for bad solder joints. You can either replace it, or carefully pull it apart and resolder the wires. Fairly easy job.

 

Mine was doing that. When I would start it any button would light up but I was always in 2wd. I checked the grounds, the actuator, buttons and solder joints, and the encoder. I disconnected the battery and was able to get it to shift temporarily. Atleast to diagnose. Sometimes even a service 4wd code can lock you out of button use. When I did scan the truck it had several 4wd codes in the history. After they were deleted my encoding issue subsided a bit. I still dont have awd but when it does intermittently glitch out I can atleast turn it off and back on. That all being said, my truck is a different beast based on its condition when I bought it. My issue was differential related. But disconnecting the battery will not clear codes. the service 4wd codes will remain in the history when you scan it if they are unresolved after changing my front diff I was able to use 4wd. When I push 4wa, the buttons lock me out right away. If I only use 4wd it works normally. Mine is a wheel sensor issue.

 

I did buy an encoder ring for my encoder but I wont change it until after the wheel bearing is fixed. Then I'll know whether there is an intermittent ecoding issue. I discovered this only because I swapped batteries, and did not leave the battery disconnected for more than the time it takes to change batteries. But when i did i got use of my buttons long enough to begin my diagnosis

 

Got the other wheel bearing I need to satisfy my abs. With the abs working my awd button should work. I removed ( beat with BFH) the wheel bearing and got it mostly completed. I just have the odds and ends left. Here's hoping this also fixes my awd. Right now it's the principle of the matter. I argued with the shop that sold me the truck that the issue was not the encoder as they told me it was, it's everything else. So far I'm tracking to be 100% right. This info was supplied by a "master mechanic" at a so called reputable shop. I'll know by tomorrow.