The anti theft system (SKREEM) on the later KJs will have Red LED flashing on the left of the cluster if the chip reader located behind the steering column...with a coil that surrounds the inserted key....does not send the correct code from the chip to the PCM/ECM. The engine should turn over and fire but then cut out after about 20 seconds.
If this Red LED is constantly ON when ignition is turned ON then the PCM is happy with the code it received from the reader but after the PCM energizes the Auto Shut Down (ASD) relay....the PCM expects confirmation from the ASD relay that it...the ASD relay...has indeed energized. With the LED on solid the engine will crank over but never fire.
First thing is to try to start in Neutral instead of or at the same time is in Park....the Park sensor may have failed. Also check all fuses under the hood and inside the cabin.
Then you can put the Jeep into Park and Neutral....so you do not run yourself over!
Place ignition key in its slot and switch ignition ON.
Remove the Start Relay from the fuse/relay box under the hood and identify the female pins 30 and 87 inside the empty socket. Now[b]briefly[b] jumper these two pins together with a piece of wire or paper clip.
Engine should turn over and start unless there is a SKREEM error.
If the SKREEM RED LED is constantly ON you can try removing the ASD relay and jumper female pins 30 and 87 together semi-permanently and see if the engine fires and runs. This points to a failed ASD relay or a wiring problem.
You can download the 2005 KJ Service Manual here..includes wiring diagrams here:
http://www.colorado4wheel.com/manuals/Jeep/KJ/