I don't know where the sensor or switch group is located on the KJ. I would go look on mine if I had received my Frankenlift already (too low). Did you maybe turn off the key while in Part time then shift to 2wd with the key off? Only a hunch because the computer thinks your two positions off. That said, I'm pretty sure the shift cable runs directly to the transfer case not some kind of modulation valve requiring vacuum or electricity to shift. The mechanical shift you were successful on was to 4lo I don’t think the shift fork or rod could make it all the way to 4lo and not stay in 4hi modes. Guessing the light indicators are incorrect and will correct themselves through re-boot, I would try engine running the whole process again. 4lo and neutral will obviously be evident when it's working. part time is also a positive engagement so will be able to test but remember to drive strait for about 40ft to allow engagement. If you are on a none slick road it will be very evident if your in 4wd while turning and driving slow. We all have and are learning computers are wrong often. We really know it's the guy who programmed it.
Just my
