1996 3500 4x4 activity in low range
 

in 4x4 hi range works fine, switch to low, and no front axle light, no vacuum to axle because of switch? anyone had similar issues?

stop messing around with vacuum systems..

posi lock your truck and forget about your 4wd not working anymore..

I had issues, but it wouldn't work in either range.. period... so I did the above, and never looked back

Does the system you describe still turn the front driveline in 2wd like the 2002's do? I kinda like being able to dis-engage the driveline

No it does not. It just replaces the vacuum actuated system with a mechanical system.
http://4x4posi-lok.com/