Maybe its not going into 4l as far as it the shifter and shift rails can and that's why you're not getting the 4wd light while in 4LO possibly hitting the tunnel cover.
1984 jeep cj7, 258 I6, rebuilt T176,rebuilt Dana 300, amc 20 , dana 30, 4.10's Trac-lok in rear , 4.10's detroit soft locker in dana 30, 2.5 inch bds suspension lift, 1 inch polyurethan body mount lift. Line ex. weber carburetor. factory tach. factory clock ,oem replacement speedomter cluster, and oil pressure gauge, factory volt gauge.