From what I've read in this thread , with what is working, and when, I would have to say it's something with your transfer case. As posted above, it's the same actuator and vacuum line that engages the front axle, if it works in 4lo, than it should work in 4hi(the actuator at least). If you can jack up all four wheels at the same time(jack stands), put it in 4hi and see if the front driveshaft spins. If it doesn't spin in 4hi, but does spin in 4lo.... Then it's your case. Good luck!
Your indicator light may just be burned out, especially if you're sure the front engages at all(lo or hi)