Another transfer case problem!

[ExhaustTech]

I have a 2000 Silverado and the darn thing will not go back into 2wd. I hear the encoder and the front diff motor working. In 4wd I shift to 2wd the light blinks and goes right back to 4 hi. It does the same thing if I try 4lo and awd. I pulled the motor off the transfer case and manually shifted the case through a few different positions but I could not find 2wd. I looked at a used case and it does the same thing. I want to try to cycle the encoder with it disconnected from the truck but there is a label that says that would be bad! I have done some searches and I am hoping it is simply the switch. I do have to push the button hard sometimes to get anything to work. What do you all think??? Switch, case or encoder.