Thanks for the input. I haven't tried the wd-40 to drive out any water, and I actually only pulled one side of the cover back. I'll do a more thorough job and see if that makes a difference.
jhill15- No, the lighting remains consistent with driving in 2H, 4H, and 4L. When shifting from 4H to 4L, the c/d diff light flashes a bit then goes solid. When shifting from 4L to 4H, the c/d diff light blinks a bit and then goes dark. The consistent blinking is only the front tires when in 2H. From what I can tell the 4wd works fine, I haven't done any off roadin yet but tested it when I bought by putting it in 4L and cranking the steering to get the chirps.