The vacuum actuator is activated by the transfer case but the 4wd light is activated when the shift fork on the axle moves. If the light is on it would be very rare that the axle isn't locked.

 

You have a vacuum line that runs down from the main hose to the top of the transfer case which has a vacuum switch. The hoses then go to the CAD "vacuum motor" on the front axle, back to the switch and then to atmosphere. The problem is that the lines can get oil in them from the vacuum pump and cause all kinds of problems. I had 'delayed engagement' on my CAD last winter and ended up trashing the transfer case (bad...). Before the snow flies again, I have a posi-lok 4X4 to put in mine. Either way, I'd get it looked at before you try to engage it much more.

 

Yeah, and make sure you check all the vacuum connections! Some of mine were a little stiff and must have let moisture in the lines so it would freeze in the winter. Ended up just getting new lines and a vacuum switch (top, driver side of transfer case) for a total of like 35 bucks. My switch was incredibly stiff, didn't surprise me it wouldn't engage.

 

Have you check your vaccum lines to make sure that they are not leaking. I have heard of them cracking and then they would work right.
Dave

 

Mine takes a while to come on... seem to have to go into neutral, stop, the just go into reverse for a second to let it fully engage.

I checked vacuum across all the lines, all is well, 25" of vacuum... I took the actuator apart and cleaned / lubed it so it slides easier, but I noticed when sliding the collar by hand (RF tire in the air), it has a tough spot about 3/4 engaged, and I bet that's where the actuator is hanging...

if there isn't an easy fix, I'm gonna do a posi-lok type setup so I can pull through the rough spot... there was an article of a jeep guy who added a cable to pull the actuator over to the lock position, using a spring to disengage it.

The system is pretty simple, it's just a pain.