I'm glad you have it working now.
According to the 'Operating Instructions' for the 1017,1217,1417,1617 (PN#380 584 01 96) that selector is for the VG500-3W transfer case.
If the truck is NOT equipped with differential lock(s) then in position 1, it is 2x4. When position 3 is selected you get 4x4 and low range
If the truck is equipped with differential lock(s) then in position 1, it is 4x4. When position 3 is selected you get low range.
Click to enlarge
View attachment 419862