06 Tahoe transfer case help

I have a 2006 Chevy tahoe 5.3l with push button 4x4

Problem is my truck always says I'm in 4auto. If I press 4lo I can hear a faint noise in the transfer case motor gears but the light just flashes and stays in 4 auto.
Same with all gears I press a button then just flashes and stays on 4 auto.
Sometimes when I start the truck it says I'm in 4hi and if I press 4 auto the light switches but cant hear anything change.
4 auto is the only button I can press to switch to that stays solid. But I still cant hear it change.
What is the most likely cause?
Here is a pic of what type of switch I have.

Also If I take the transfer case motor off and try and switch it into 2hi manually. How would I know if I'm in 2hi? Do I start all the way clockwise or counterclockwise?

Thank you all in advance

i'd say your transfer case is going out or it could be the encoder motor that selects what gear you want the transfer case in.

TC RPO code is NP8, correct?

Not sure if it matters but your switch should be all black and the word "NEUTRAL" should not be spelled out. It should have just an "N". The one you posted appears to be from an earlier (OBS) but, again, I'm not sure if it matters.



You can pull the switch and ohm it out to see if all positions have the correct resistance. You can also see if the transfer case control module is providing 5v to the switch. If you're interested in either of those tests I had posted instructions in a different link. Search for it or I can look for it later on and add the link here.

If those two tests pan out you're probably looking at replacing the transfer case encoder motor, around $120-$180 depending on what and where you buy.