In that case there can be many reasons for the flashing lights.
ECU error
vacuum error
solenoid error
actuator error
diff sensor error
transfer case sensor error
As per link to my site above, look if the shaft on the diff is moving back and forth between 2h and 4h. If it is then the flashing lights can be ignored for the time being and the error is most likely a sensor switch.
If the shaft on the diff is not moving back and forth between 2h and 4h then the problem will be a vacuum solenoid or actuator or vacuum related problem.
