With the help of the service manual I figured it out. No mention of this in the manual's section for locker troubleshooting but the issue was the key-in sense circuit. The ignition actuator pin assembly had broken on me and I replaced it but did not think to check the key-in circuit. With the key in a ground circuit is opened to the instrument cluster and this caused only the axle lock sensors to flash. On the actuator there is a brass/copper slide that contacts a lug when a key is inserted and this needed to be tweaked a bit to get a good contact. In the instrument cluster section of the manual it mention the flashes and beeps that are supposed to occur when the axles are locked, ignition turned off and key still in, mine didn't beep and thats what tipped me off.
Experience is what you get when you dont get what you want and I gained some on this one!!